The oil market is navigating an environment of extreme nervousness. Despite Donald Trump’s decision to postpone a potential military strike on Iranian energy infrastructure by ten days, crude prices continue to climb. Brent is trading around USD 105, while WTI is hovering near USD 97, levels that reflect a persistent and significant risk premium. The diplomatic deadlock, a 15‑point American peace plan rejected by Tehran, and Iranian demands deemed unacceptable, including security guarantees and recognition of its authority over the Strait of Hormuz, keeps the market on high alert. The threat of military escalation remains substantial. Washington is currently deploying thousands of additional troops to the Middle East, and Trump is even considering the use of ground forces to seize Kharg Island, a major Iranian oil terminal. Since the beginning of the conflict, Brent has surged 50%.
The current dynamics of the oil market are driven by a central factor: geopolitics has overtaken fundamentals. Even though global demand remains moderate and non‑OPEC supply is increasing, the risk of open conflict in the Strait of Hormuz, a chokepoint through which nearly one‑third of seaborne oil transits, is enough to keep prices elevated.
The ten‑day postponement does not constitute de‑escalation but merely a delay. As long as the positions of Washington and Tehran remain irreconcilable, the market will continue to price in the possibility of a sudden supply disruption. The growing militarization of the Gulf reinforces the perception of imminent conflict, and the oil market behaves as a geopolitical asset first, and an economic one second.
In the short term, the trend remains upward as long as the diplomatic impasse persists. In the medium term, investors must factor in the possibility of a supply shock, a potential reaction from OPEC+, and the inflationary consequences that could influence monetary policy. Oil thus offers tactical upside, but at the cost of extreme risk.