Crude oil prices rebounded sharply. The move erased a short-lived drop that happened when investors thought tensions might cool. That hope evaporated fast after Trump's blunt promise: "Iran is going to get a beating," he said. "We'll be hitting them hard."
U.S. oil prices followed the same path. West Texas Intermediate futures, the American benchmark, jumped 6.8% to $84.69 a barrel.
The recent price jump highlights how vulnerable the area's energy supply routes are. The five-month-old conflict, sparked by a nuclear standoff, has repeatedly threatened the Strait of Hormuz, through which about 20% of global oil passes. Iran's demand to control the waterway as part of any ceasefire deal has been a major sticking point, keeping traders on edge and underpinning a risk premium in crude prices.
The current conflict began five months ago when a nuclear standoff between the U.S. and Iran escalated into open hostilities. Since then, repeated attempts at diplomacy have failed, with Iran demanding control over the Strait of Hormuz as a condition for any ceasefire. The strategic waterway, through which roughly a fifth of global oil passes, has become a flashpoint, with both sides trading threats and missile strikes. This ongoing instability has kept oil markets on edge, with traders factoring in a constant risk premium.
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Helima Croft, who leads commodity strategy at RBC Capital Markets, expressed continued skepticism regarding diplomatic progress. "We remain exceedingly skeptical that we are on the brink of a major diplomatic breakthrough that will resolve the nuclear standoff that started the war five months ago or enable the normalization of maritime traffic," she said.
The catch: Even if talks somehow restart, Iran has made clear it wants control of the Strait of Hormuz. Ryan McKay, a senior commodity strategist at TD Securities, says markets bet too quickly on peace. "Markets have jumped the gun on hopes of renewed peace, especially considering Iran's insistence on controlling the Strait under any potential deal," he said.
McKay points to a simple reason: less oil is moving around the world. "We continue to see reduced flows and global tightening of the energy market as supportive of further upside in crude oil," he said.
The Strait of Hormuz, a slim channel separating Iran and Oman, serves as a vital passage for international oil transport. Roughly one-fifth of the world's petroleum passes through it daily. Iran's repeated threats to disrupt traffic there have kept traders on edge since the conflict began five months ago.
The latest missile attack follows a period of relative calm when some hoped a ceasefire would ease tensions. But with both sides unwilling to back down, analysts at RBC and TD Securities see no quick resolution. The risk of supply disruptions remains high, and any further escalation could push Brent above the $100 mark, a level not seen since the early months of the war.
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