Oil just got expensive again. West Texas Intermediate crude jumped 10% to $110.21 a barrel on Thursday after President Donald Trump promised to “hit” Iran “extremely hard” over the next two to three weeks. Brent crude, the international benchmark, climbed 8% to $109.25 per barrel. It’s the kind of market reaction you get when traders realize the guy in charge isn’t looking for an exit ramp.
Trump’s message was deliberately mixed. Yes, he said the U.S. will “finish the job, and we’re going to finish it very fast,” but he also left the door slightly open for talks, claiming discussions with Tehran “are ongoing.” Markets, it turns out, don’t love that kind of ambiguity when it comes to regional military conflict.
The Binary Outcome That Didn’t Happen
George Efstathopoulos, portfolio manager at Fidelity International, told CNBC that investors had essentially been waiting for one of two outcomes: either Trump would signal a war exit, or he’d telegraph prolonged uncertainty. “Clearly we seem to be on the latter path right now,” Efstathopoulos said. The result is exactly what you’d expect from uncertainty on steroids. Risk-off sentiment is back, and oil is climbing because nobody knows when the Strait of Hormuz will actually reopen.
That matters. A lot. The Strait of Hormuz typically sees about a fifth of the world’s oil and gas flows pass through it. Since the U.S.-Israel war against Iran began on February 28, traffic has essentially ground to a halt. One analyst called it “one of the world’s most devastating energy crises.” For context, that’s not hyperbole.
What’s Actually Happening at the Strait
The real problem is that nobody’s in charge anymore. Giles Alston, a political risk analyst at Oxford Analytica, noted something striking on CNBC: “It’s becoming increasingly clear that the U.S. position on what you do to get your oil out of and through the Straits of Hormuz is now something which Washington has largely washed its hands off. This is now something for those who take oil through the Strait to sort out for themselves.”
Translation: if you’re an oil company or tanker operator, good luck. The U.S. isn’t guaranteeing safe passage anymore.
Trump’s rhetoric has been all over the place. Earlier on Wednesday, he posted on Truth Social that Iran had asked for a ceasefire and that he’d consider it if the Strait remains “open, free, and clear.” He even threw in a threat: “we are blasting Iran into oblivion or, as they say, back to the Stone Ages!!!” Oil prices dipped below $100 briefly on that news. Then he walked it back somewhat, suggesting the U.S. military would wind down in “two or three weeks,” and suddenly everyone had to recalibrate what he actually meant.
The Credibility Problem
Iran, unsurprisingly, is denying Trump’s ceasefire claim. The Islamic Republic said the waterway remains “decisively and dominantly under the control of the IRGC Navy” and that it won’t reopen based on what it called the U.S. leader’s “absurd displays.”
This is the pattern now. Both sides contradict each other constantly. Trump says talks are progressing; Iran says they’re not. Trump signals military drawdown; then reports emerge that the U.S. is preparing to send thousands more troops. When the two most powerful voices in a conflict keep giving contradictory signals, markets price in the worst-case scenario. That worst case right now is a prolonged conflict that keeps the Strait closed and keeps Business energy costs elevated.
Oil at $110 isn’t just a number. It ripples through everything else. It hits shipping costs, it affects inflation, it changes what companies will invest in. And it all traces back to the simple fact that nobody, including Trump himself, seems sure what happens next.
The market is pricing in the only thing it can be sure of right now: more uncertainty ahead.
