Trump spent the weekend hinting at a deal with Iran. The deal would reopen the Strait of Hormuz.
By Tuesday morning, the U.S. was hitting Iran again. Traders are stuck between two stories, and oil is paying the bill.
The U.S. military said it ran "self-defense strikes" in southern Iran early Tuesday. The U.S. went after boats it said were laying mines and a few missile launch sites.
Iran said it would hit back. It says it has already engaged U.S. drones and a jet that crossed into its airspace.
The news pushed Brent crude past $100 a barrel. Brent is the world's main oil price.
WTI is the U.S. oil price. It had been closed Monday for the long weekend.
It opened to a 2% drop on Tuesday. It then won back some of that loss.
Talks with Iran are still going on. Iran's news agency called talks with Washington "overall good."
But the country said a real deal hangs on the U.S. freeing $24 billion in frozen funds. The news cycle has whipsawed oil all month.
Last week, Trump hinted at a deal that would reopen the Strait of Hormuz. By Tuesday, U.S. forces were back on the attack.
That kind of swing makes oil hard to trade. It also makes it the cleanest read on how the rest of the market feels about war risk.
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UBS sent out a note Friday. Traders are still chewing on it.
The Swiss bank says world oil stocks fell by 246 million barrels in March and April. The drop came as Strait of Hormuz problems kept ships from moving.
Lost output could top 1 billion barrels by the end of May. That's the kind of math that turns a war headline into a real supply problem.
Think of oil stocks like a savings account. The world dips into it when supply runs short.
That account is shrinking fast. The drop matters far beyond gas pumps since oil spikes can ripple through the rest of the stock market.
Trump's Cabinet meets at Camp David on Wednesday. The president said talks with Iran are "proceeding nicely."
But he warned the U.S. could go back to strikes if talks fall apart. His weekend post pushed six countries to join the Abraham Accords, which made the talks even harder to land.
For investors trying to track what a flare-up means for growth, oil is the cleanest read on how the market feels each day. Oil traders aren't pricing in a peace deal.
They're pricing in the next strike.
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