Oil Prices Volatile as Trump Signals End to Iran Conflict
Oil prices experienced significant volatility on Tuesday, initially plunging as much as 10% before paring losses, as investors reacted to comments from U.S. President Donald Trump regarding the ongoing conflict with Iran and potential disruptions to oil flows through the critical Strait of Hormuz.
Brent crude was down around 4.3% at $94.62 per barrel as of 11.45 p.m. ET on Monday. U.S. Crude oil fell 3.8% to about $91 per barrel. These declines followed a surge past $100 per barrel earlier in the day.
Trump’s Shifting Signals
President Trump initially signaled that the conflict with Iran could end soon, contributing to the downward pressure on oil prices. However, he later warned that Tehran would be hit “twenty times harder” if it attempted to halt oil flows through the Strait of Hormuz, posting the warning on Truth Social.1
“If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far,” Trump stated.1
The Strait of Hormuz: A Critical Chokepoint
The Strait of Hormuz, located between Oman and Iran, is a vital transit route for global energy markets. Approximately 13 million barrels of oil passed through the waterway in 2025, accounting for roughly 31% of global seaborne oil flows.1 It connects major Gulf producers, including Saudi Arabia, Iran, Iraq, and the United Arab Emirates, to the Gulf of Oman and the Arabian Sea.
Trump added, “This is a gift from the United States of America to China, and all of those Nations that heavily use the Hormuz Strait. Hopefully, it is a gesture that will be greatly appreciated.”1
Iran’s Warning and Potential for Disruption
The comments from President Trump came as a spokesperson for Iran’s Ministry of Foreign Affairs warned on Monday that oil tankers transiting the Strait of Hormuz “must be highly careful.”1
Earlier in the day, Trump told CBS News that ships were continuing to pass through the Strait of Hormuz, adding that he was “thinking about taking it over.”1 At a press conference, Trump also stated that the war against Iran would end “very soon,” and oil prices would drop.1
Market Reaction and Expert Analysis
Bob McNally, president at Rapidan Energy Group, noted that Trump’s comments had soothed nerves regarding potential energy supply shocks. “I think there’s a lot of optimism in the market,” McNally said. “We saw that today with the collapse in oil prices on what we used to call verbal intervention from the President.”1
McNally pointed out that the market is still grappling with the scale of the disruption, noting that traders have historically assumed no country would be allowed to fully close the Strait of Hormuz, even during tensions in the 1980s.1
Andy Lipow, president of Lipow Oil Associates, cautioned that it was too early to draw firm conclusions. “We will have to wait and see how Iran responds to the President’s comments and whether or not Iran will attack any oil infrastructure in the coming hours,” he said.1
G7 Discussions on Emergency Oil Reserves
Energy ministers from the Group of Seven nations are scheduled to hold a virtual meeting to discuss a potential release of emergency oil reserves to mitigate supply disruptions caused by the conflict.1
Sources indicate that discussions among member states have been “positive,” and a coordinated release of between 300 million and 400 million barrels – roughly 25% to 30% of the group’s combined 1.2 billion-barrel reserves – is being considered.1
Fatih Birol, Executive Director of the International Energy Agency (IEA), stated that he discussed all available options, including making IEA emergency oil stocks available to the market, during a meeting with G7 finance ministers.1 The IEA member countries hold over 1.2 billion barrels of public emergency oil stocks, with an additional 600 million barrels held by industry under government obligation.