What Trump’s Iran Ultimatum Means for Oil Prices Today

TLDR

• Trump gave Iran an 8 p.m. ET Tuesday deadline to reopen the Strait of Hormuz or face military strikes
• Despite the threat, Brent crude dropped 0.3% and WTI edged up only slightly
• Trump threatened to destroy Iranian bridges and power plants within four hours
• Iran warned it would attack energy infrastructure in the Persian Gulf if struck
• Markets may be calm because Trump has moved this deadline several times already

Oil prices barely moved Tuesday as markets waited on President Donald Trump’s deadline for Iran to reopen the Strait of Hormuz. The conflict is now six weeks old and has already caused a major supply shock in global crude markets.

Despite those threats, oil prices showed little reaction. Brent crude futures fell 0.3% to around $109.40. West Texas Intermediate edged up just 0.2% to $112.59. Both benchmarks were largely flat on Monday too.

Brent crude futures for July delivery dipped below $100 a barrel at one point. WTI for July traded at $90.43, lower than it was a week ago.

One reason markets may be calm is that Trump has already moved this deadline several times. Traders may not believe he will follow through this time either.

AJ Bell analyst Dan Coatsworth said there are a few possible outcomes. Washington or Tehran could back down, which might cause a rally in stocks and a drop in energy prices. Or there could be a major escalation with wider effects on financial markets.

Coatsworth also raised a third possibility — the deadline gets extended again, leaving markets in another uncertain waiting period.

Iran’s Threat to Persian Gulf Energy

Iran has warned it will respond to any US strikes by attacking energy infrastructure in the Persian Gulf. That kind of counter-strike could tighten global fuel supplies further and put more pressure on the world economy.

Negotiators are reportedly pessimistic that Iran will meet Trump’s demands, according to the Wall Street Journal. The Strait of Hormuz is one of the world’s most important oil shipping routes.

Societe Generale analysts wrote that markets face two main scenarios. Either a fragile truce with no ground war and a slow supply recovery, or a long conflict with troops on the ground and permanently higher risk in energy markets.

Oil Supply Signals Already Tightening

There are signs traders are already pricing in tighter near-term supply. WTI’s prompt spread — the gap between its two nearest futures contracts — hit close to $15.50 a barrel on Monday, near a record high.

That move came as overseas buyers rushed to purchase American crude. US supply expectations have been tightening as the conflict drags on.

Trump said Monday that talks with Iran were “going well,” though he made clear the consequences if no deal is reached by his deadline.

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