Trump’s Threats to Iran Trigger Sharp Rise in Oil Prices Amid Geopolitical Tensions
Brent and WTI crude prices surged over 7% following US-Iran conflict escalation and potential Strait of Hormuz blockade
Oil prices saw a significant jump on April 29 as US President Donald Trump issued stern warnings against Iran amid escalating geopolitical tensions. The benchmark Brent crude oil contract for June delivery rose by 7.1% to $119.19 per barrel, briefly surpassing $119.76. Meanwhile, the American benchmark West Texas Intermediate (WTI) crude climbed over 7.6%, reaching above $107 per barrel.
Financial Impact of US-Iran Conflict on Energy Markets
The spike in oil prices follows Trump's remarks to Axios news portal, opposing the reopening of the Strait of Hormuz unless Iran reaches an agreement on its nuclear program. The Wall Street Journal reported that a blockade of this vital waterway, through which approximately 20% of global oil passes, could last several months, increasing supply concerns.
The Pentagon disclosed that the ongoing conflict with Iran has already cost the US approximately $25 billion, with the majority of spending allocated to ammunition and military operations. Acting Deputy Secretary of Defense for Finance Jules Hurst provided this figure during a congressional briefing on April 29. The US Secretary of Defense, Pete Hegseth, however, suggested the actual cost might be lower.
President Trump has directed his administration to prepare for a long-term blockade of Iran. According to The Wall Street Journal, citing US officials, Trump proposed to continue exerting economic pressure on Iran by obstructing its oil exports and preventing vessels from entering or exiting Iranian ports. The administration views a blockade as less risky than options like direct military strikes or withdrawing from the conflict.
“Other options such as bombing Iran or exiting the conflict carry more risks than establishing a blockade,” according to US officials familiar with Trump’s national security discussions.
The conflict intensified after US and Israeli airstrikes on February 28 targeted Iranian leadership, including the death of Supreme Leader Ayatollah Ali Khamenei’s associates. Iran retaliated with strikes on US sites in neighboring countries and effectively blocked shipping through the Strait of Hormuz.
Initial direct negotiations between the United States and Iran took place in Islamabad on April 11 following a ceasefire agreement. However, these talks failed to yield a positive outcome. Subsequently, Trump announced the US Navy’s control over the strait, with Tehran accusing Washington of violating the ceasefire agreement.
The ongoing instability in the Middle East continues to pressure global energy markets, with investors closely monitoring military developments and diplomatic efforts. The sharp rise in crude prices reflects growing concerns over supply disruptions and the potential for an extended blockade, which could exacerbate inflationary pressures worldwide.
