A black swan could be surfacing in the oil markets.
Oil prices sharply extended gains on Wednesday after U.S. National Security Advisor Michael Flynn said the White House is putting Iran "on notice." That raised concerns President Donald Trump could take actions that would hobble Iran's efforts to revive its oil and gas industry, spark conflicts along oil supply routes and ultimately drive crude prices higher.
"As soon as those comments hit the wires, you saw a bit of a rally in crude oil," said John Kilduff, founding partner at energy hedge fund Again Capital.
Flynn said the warning is a response to Iran carrying out a ballistic missile test this week and its support for Houthi rebels in Yemen's civil war. During a White House press briefing, he called agreements struck by the Obama administration, the United Nations and Iran "weak and ineffective."
"Instead of being thankful to the United States for these agreements, Iran is now feeling emboldened. As of today, we are officially putting Iran on notice," he said.
Under a deal reached between Iran and six world powers, Tehran accepted limits on its nuclear program in exchange for sanctions relief. Iran has conducted several ballistic missile tests since the nuclear deal went into effect, but the latest is the first since Americans elected a president who has threatened to pull out of the accord.