Energy and Oil Sector
Oil markets whipsaw as U.S.-Iran tensions flare, then ease on diplomatic hopes—tanker traffic through critical Hormuz strait collapses, pushing traders to bet normal flows won't return until 2027.
President Trump declared the Iran ceasefire dead and threatened to bomb Iran and reimpose a naval blockade after Iranian attacks on tankers in the Strait of Hormuz (CNBC Energy). West Texas Intermediate crude jumped 4.4% to $73.52 per barrel, while Brent international benchmark oil rose 5.2% to $78.02—the biggest daily moves in months. Trump later walked back the worst-case language, saying he expected the conflict to end "very quickly" and oil prices to fall as tankers resume normal flow.
Oil fell 2% on Thursday as Qatar and Pakistan worked to broker a return to negotiations between Washington and Tehran, tempering hopes for a full-blown war (CNBC Energy). Brent crude dropped 2.2% to $76.30, while WTI slid 2% to $72.08. Citibank analysts believe both sides have too much economic skin in the game—Trump wants stable equity markets, and Iran can't afford prolonged sanctions—to let the conflict spiral beyond "missile skirmishes" between periods of relative calm.
The critical Strait of Hormuz—which handles roughly one-third of global seaborne oil—saw tanker crossings plummet to just 5 overnight Thursday, versus an average of 33 per day the week prior (CNBC Energy, Windward maritime data). Oil rallied 6-7% this week on fears the strait could shut down entirely as in early 2026, when the U.S.-Israel strikes killed Iran's leader and triggered the biggest supply disruption in history. Analysts say the market is now pricing in a "new normal" of sporadic fighting interrupted by periods of uneasy calm that allow some ships through—not a complete closure.