Oil prices rocketed above the psychologically important $110-per-barrel mark on Thursday after President Donald Trump signaled that Washington was preparing for a further phase of military action against Iran over the next two to three weeks, sharply reversing the previous session’s optimism that the conflict might be nearing a diplomatic off-ramp.
U.S. West Texas Intermediate crude for May delivery surged about 10% to $110.21 a barrel in early trade, while June Brent crude, the global benchmark, climbed roughly 8% to $109.25, as traders swiftly rebuilt a geopolitical risk premium into the market. The rally marked one of the sharpest single-session gains since the outbreak of the war and underscored how acutely energy markets remain tied to every signal coming out of Washington and Tehran.
The renewed jump came after Trump, in a prime-time national address on Wednesday, warned that the United States would hit Iran “extremely hard” in the coming weeks, while insisting that the campaign would be concluded quickly.
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“We are going to finish the job, and we’re going to finish it very fast,” he said.
The remarks dampened hopes that the White House was preparing to scale back military operations or that tanker traffic through the Strait of Hormuz could resume in the near term.
For much of Wednesday, markets had moved in the opposite direction. Crude had retreated toward the $100 threshold after Trump suggested there were ongoing discussions with Tehran and hinted that the war might be nearing its final stage. Thursday’s violent reversal highlighted the fragility of that optimism and the extent to which the market is trading on headline risk rather than fundamentals alone.
The Strait of Hormuz, the narrow maritime corridor through which nearly one-fifth of the world’s seaborne crude and liquefied natural gas normally passes, remains the bone of contention. Shipping traffic through the route has been severely curtailed since the conflict escalated, effectively choking one of the world’s most critical energy arteries.
The implications extend well beyond the Middle East. Any prolonged disruption to Hormuz threatens export flows from Saudi Arabia, Iraq, Kuwait, the United Arab Emirates, and Qatar, tightening supply conditions for refiners across Europe and Asia. That has left traders increasingly focused on worst-case scenarios, including the possibility of a sustained blockade that could remove millions of barrels per day from global supply.
George Efstathopoulos, portfolio manager at Fidelity International, described the market’s positioning ahead of Trump’s speech as a wager on a “binary outcome” — either a clear signal toward de-escalation or confirmation of a more prolonged conflict. The president’s remarks, he said, appeared to point decisively toward the latter.
That view was echoed across broader financial markets, where the renewed oil spike fed a classic risk-off mood. Wall Street futures weakened sharply, with airlines and travel stocks coming under pressure, as investors rotated toward energy producers and safe-haven assets. The S&P 500 fell while the Dow shed hundreds of points as crude prices surged.
The inflation implications are equally significant, as a sustained period of oil above $100 a barrel risks reigniting price pressures globally just as central banks were beginning to gain confidence that inflation was easing. For economies already grappling with elevated fuel and transport costs, the latest move in crude raises the prospect of renewed pressure on consumer prices, freight rates, and industrial input costs.
Analysts say the rally is no longer simply about immediate supply disruption but about the market’s reassessment of conflict duration.
“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,” Giles Alston, political risk analyst at Oxford Analytica, said on CNBC on Thursday.
The absence of a credible timetable for reopening Hormuz or securing tanker routes has shifted attention toward how long the risk premium will remain embedded in prices.
Iran, for its part, pushed back against Trump’s assertion that a ceasefire request was under consideration, insisting that the waterway remains under the control of the Islamic Revolutionary Guard Corps Navy and rejecting U.S. conditions for reopening the route. The contradictory messaging from both sides has only deepened market volatility, with prices swinging sharply on each new headline.
Political risk analysts now warn that even if direct hostilities were to ease, shipping insurers, tanker operators, and commodity traders may remain reluctant to fully restore flows through the strait until security guarantees are firmly in place.
That means the energy shock may outlast the military campaign itself.
For investors, the immediate question is whether this is a temporary wartime spike or the beginning of a structurally tighter oil market. If the Strait of Hormuz remains effectively closed for an extended period, some market watchers believe crude could test levels last seen during the 2022 energy crisis, with scenarios above $120 no longer being dismissed as extreme.
What Thursday’s price action made clear is that markets are no longer pricing a swift resolution. Instead, they are beginning to prepare for a conflict whose economic consequences could reverberate well into global inflation, trade, and monetary policy.