Oil prices took a sharp turn upward Monday after President Donald Trump walked back his earlier claims that the U.S. was actively negotiating with Iran over shipping routes through the Strait of Hormuz.
U.S. West Texas Intermediate crude, the American benchmark, rose nearly 5% and settled at $82.13 per barrel. The international standard, Brent crude, finished about 5% higher at $87.72 per barrel.
A Deal That Keeps Slipping Away
The whole story hinges on a narrow stretch of water between Iran and Oman. The Strait of Hormuz is a critical passage for global oil shipments, and it has been at the center of a tense standoff for months.
On Sunday, Axios reported Trump's comment that the U.S. is only "semi-negotiating" with Tehran. That is a notable shift from the week before, when he suggested a deal was close. He also said he would keep pressing Iran through the U.S. naval blockade rather than launch another round of airstrikes.
"We are just watching Iran with its huge inflation and the fact they have no money," Trump said.
Get the free Always Be Buying eBook and learn the simple system for building wealth on any income
On June 17, the two nations signed a memorandum of understanding aimed at reopening the strait to commercial traffic. That deal fell apart over a simple but stubborn problem: which routes ships could use. Iran insisted vessels travel through its territorial waters. The U.S. pushed back, and the agreement collapsed.
Trump called off a planned strike against Iran on Aug. 1 to leave room for negotiations. Since then, both sides have hardened their positions rather than softened them.
Both Sides Dig In
Iran's Foreign Ministry spokesman Esmail Baghaei made the country's stance clear Monday. "As long as the U.S. naval blockade continues, the necessary conditions for the reopening of the Strait of Hormuz do not exist," he said, speaking through state news agency Tasnim.
Iran has been conducting bilateral talks with Oman about shipping routes through the strait, but those discussions do not include the U.S. side. Meanwhile, Iran has carried out multiple attacks on tankers traveling along Oman's coast under U.S. military protection. In response, the U.S. retaliated with multiple airstrikes and reinstated its naval blockade.
This back-and-forth explains why oil prices have been swinging wildly. Last week, prices fell more than 7% after Treasury Secretary Scott Bessent told CNBC that a Hormuz deal with free ship movement could be imminent. No deal was announced, and now the market is pricing in the opposite outcome.
What It Means for Your Portfolio
The bigger picture is about supply. That is a four-decade low, and it means the U.S. has less cushion to absorb disruptions than it once did.
The bottom line: Oil prices are reacting to headlines, and those headlines are changing by the day. A deal could still happen, which would likely push prices back down. Or the standoff could drag on, keeping prices elevated and making your gas station trips a little more painful.
For investors, the takeaway is not about predicting the next tweet or statement. It is about understanding that a single shipping lane can move global prices by 5% in a day. When a key route stays tangled in geopolitics, energy prices will keep swinging - and so will the stocks tied to them.
Download the free Always Be Buying eBook and start putting your money to work today
