The crude oil market is trading in a "fog": the US government is frequently sending out mixed messages, causing oil prices to fluctuate and rise.

After experiencing another volatile day, oil prices rose as the market struggled to digest the rapidly changing statements from the Trump administration regarding the possibility of war with Iran and the shipping lanes in the Strait of Hormuz. After WTI crude oil prices plummeted 12% on Tuesday, they rose 6.2% to $88.59 per barrel, causing intense market volatility. U.S. Energy Secretary Chris Wright mistakenly posted (and later deleted) a message claiming that a U.S. naval escort had been provided to an oil tanker passing through the narrow strait near Iran, but the White House later admitted that no such action had taken place. The Strait of Hormuz typically handles one-fifth of the world's oil transport, but with shipping nearly halted, major oil-producing countries are reducing production, leading to soaring prices for energy sources like crude oil and natural gas. With a sharp decrease in oil tanker shipments, the market is closely monitoring when normal trade will resume. Traders also have to deal with a series of conflicting messages from U.S. President Trump on social media regarding the issue of sea mines in the strait. The U.S. leader is facing increasing economic and political pressure due to the conflict, and he stated on Monday evening that the conflict would soon end, but not this week. However, U.S. officials signaled on Tuesday that military action is escalating and the possibility of diplomatic negotiations is slim, which undoubtedly poured cold water on Trump's expectations for the conflict. The frequent announcements by the U.S. president and the misstatements by Wright highlight the confusion in the U.S. regarding information dissemination on the war issue. Rebecca Babin, a senior energy trader at the Private Wealth Group of the Canadian Imperial Bank of Commerce, said: "It feels like the market is trading in the fog of war right now, reacting in real-time to developments rather than fluctuating in an orderly manner. The drastic fluctuations and continued volatility in oil prices are exhausting traders, and news headlines are exacerbating the intraday price swings." The Middle East conflict has entered its second week, involving dozens of countries and raising concerns about an inflation crisis. U.S. retail gasoline prices are soaring, putting more pressure on Trump. Reportedly, Saudi Arabia, Iraq, the UAE, and Kuwait have collectively reduced production by up to 6% of global output, totaling 6.7 million barrels per day. The UAE's largest oil refinery was shut down after a drone attack. Amin Nasser, CEO of Saudi Aramco, stated on Tuesday: "If this chaos continues for a longer period of time, the world oil market will face catastrophic consequences, and the impact on the global economy will become more severe." This is Nasser's first public statement since the disruption of Middle East oil flow due to the war.