Oil markets don’t like uncertainty. They hate it. And right now, they’re getting fed a steady diet of conflicting signals from Washington that’s making traders nervous enough to bid crude prices sharply higher.
During a national address on Wednesday, President Donald Trump warned that the U.S. would “hit” Iran “extremely hard” over the next two to three weeks. The rhetoric was brutal. “We’re going to bring them back to the stone ages, where they belong,” he said. Within hours, U.S. West Texas Intermediate crude futures for May jumped 4.1% to $104.21 a barrel, while international benchmark Brent crude for June climbed 5% to $106.42 per barrel.
The timing matters here. Earlier on Tuesday evening, Trump had suggested the military operation would wind down in two or three weeks, seemingly signaling an exit strategy. By Wednesday, that same two-to-three-week window had become a threat window instead. Welcome to the whiplash that’s plaguing global markets right now.
The Oil Chokepoint Nobody Can Fix
The real pain is happening in the Strait of Hormuz, where roughly 20% of the world’s oil and gas normally flows through. That traffic has effectively stopped since the conflict escalated on February 28. According to reporting from CNBC, political risk analyst Giles Alston at Oxford Analytica said the situation has become clear: Washington has “largely washed its hands off” managing that passage, leaving oil producers to figure it out themselves.
Trump claimed on Truth Social that Iran had requested a ceasefire, but tied any reopening of the strait to vague conditions: it must be “open, free, and clear.” Iran quickly denied the claim, with officials saying the waterway remains “decisively and dominantly under the control of the IRGC Navy” and won’t reopen based on what they called Trump’s “absurd displays.”
Both sides keep contradicting each other. It’s theater, but expensive theater when millions of barrels of oil can’t move.
Markets Are Bracing for the Worst
George Efstathopoulos, portfolio manager at Fidelity International, told CNBC that markets had been waiting for a “binary outcome” from Trump: either a signal of war exit or further escalation. “Clearly we seem to be on the latter path right now,” he said. That pivot is pushing investors toward risk-off sentiment, meaning they’re pulling back on riskier bets while waiting for actual clarity that never seems to come.
Trump’s explanation for the oil spike blamed Iran directly, attributing price increases to “the Iranian regime launching deranged terror attacks against commercial oil tankers.” Whether that framing holds water depends on your geopolitical lens, but the market’s reaction was unambiguous.
The contradiction at the heart of all this is sharp. Trump says negotiations are ongoing. He also says he’ll escalate. He says he’s leaving in two or three weeks. He also says he’ll hit Iran extremely hard in two or three weeks. Investors hate this kind of incoherence because it makes hedging impossible.
What Happens Now
If the Strait of Hormuz stays closed and military tensions hold, oil could stay elevated or climb further. If Trump actually does wind down operations quickly as he suggested on Tuesday, expect a sharp reversal lower. The problem is nobody knows which version of Trump’s position will actually prevail.
That uncertainty isn’t priced into markets yet. It’s what’s driving them higher. And until either a real diplomatic breakthrough emerges or the U.S. actually leaves the region, crude futures will probably keep hunting for direction in the noise.
