Oil rebounds as US-Iran strikes revive supply fears

Oil edges higher as weekend strikes rattle supply outlook

Oil prices moved up at the start of the week after renewed military strikes between the U.S. and Iran over the weekend revived concerns about crude supplies from the Middle East. The immediate focus for traders was the risk of disruption around key export routes and the knock-on impact on inflation expectations. West Texas Intermediate futures rose 1.3% to $10.17 a barrel. International Brent climbed 0.78% to $12.55.

The price move came alongside fast-changing headlines, with markets trying to assess whether tensions would escalate or move back toward negotiations. The Strait of Hormuz remained central to the story because of its importance to oil and gas transportation flows. The evolving situation set the tone for a week where crude prices, stock indexes, and the dollar all reacted sharply to new statements and policy signals.

A market narrative that changed quickly

The information flow was unusually rapid, with investors shifting between two competing outcomes: supply disruption and de-escalation. Oil prices plunged and stocks surged after reports pointed to a U.S.-Iran peace deal, while the dollar slipped to a 10-day low. Early on Wednesday, futures for the Dow Jones surged, alongside gains in S&P 500 and Nasdaq futures, as crude oil prices dropped to $10 per barrel.

At the same time, the diplomatic messaging remained conditional. Reports indicated that a deal between the U.S. and Iran was nearing completion, but President Donald Trump warned Tehran must come to an agreement or face the possibility of “bombing” resuming. On Tuesday night, Trump announced a “pause” in the initiative to navigate ships through the Strait of Hormuz, citing “Great Progress” in negotiations with Iran.

Strait of Hormuz risk drives cross-asset volatility

U.S. stocks showed mixed trading on Monday after President Trump directed a blockade of the Strait of Hormuz following the breakdown of negotiations between the U.S. and Iran. The Dow Jones Industrial Average fell 0.3%, reflecting renewed worries that higher energy prices could add to inflation pressure and threaten global growth. The S&P 500 edged up 0.1% after recovering from earlier losses, while the Nasdaq Composite rose 0.3% on a surge in software stocks.

The same theme was visible again in early trading during another market update, where oil strength weighed on equities at the start of the week. The Dow Jones Industrial Average fell 0.7% in early trading as crude moved higher. The key market linkage was straightforward: higher oil raised concerns about inflation and the possible policy response, while lower oil supported risk assets.

Retaliation warnings and a spike above $100 a barrel

Tensions escalated further after Iran pledged to target all Persian Gulf ports if its own oil facilities were jeopardized, calling the U.S. action “an act of piracy.” Oil prices surged past $100 a barrel amid fears for global energy supplies. Brent increased by 5%, and U.S. West Texas Intermediate for May rose by roughly 5%, exceeding $101 per barrel.

Another update put the benchmarks even higher during the escalation. Oil prices reached $100 a barrel, with Brent trading at $101 and West Texas Intermediate at $103. The speed of the move reinforced how quickly crude markets can reprice when perceived supply risk rises around strategic chokepoints.

Ceasefire announcement triggers a sharp reversal in crude

The tone shifted again when President Trump announced a ceasefire in the conflict with Iran. Oil prices fell sharply while U.S. stock futures climbed. U.S. crude oil fell by over 15%, settling around $15 per barrel, after peaking at $117 on Tuesday.

In a separate market snapshot tied to a two-week truce, oil, bonds, and equities reflected relief. Trump said he had agreed to pause military action against Iran for a fortnight while talks for a lasting peace agreement were underway. Iran said it would stop hostilities if attacks on it were halted and stated that secure passage through the Strait of Hormuz would be possible for the next two weeks in coordination with the Iranian military. U.S. crude oil futures dropped about 16.5%, settling at $14 per barrel, while S&P 500 futures surged by over 2%.

Stocks rally as oil shock fears ease

The relief trade extended into global equities. In U.S. markets on Wednesday, the S&P 500 rose 2.5%, the Nasdaq Composite jumped 2.8%, and the Dow Jones Industrial Average gained 2.8%, an increase of over 1,300 points. Futures also reflected the risk-on move during the ceasefire-driven rally, with the Dow up over 1,100 points, a 2.5% increase, Nasdaq 100 futures up 3.5%, and Russell 2000 futures up 3.8%.

Moves were also pronounced across Asia and Europe. Japan’s Nikkei 225 rose 5.5%, Australia’s ASX 200 gained 2.5%, and Hong Kong’s Hang Seng climbed 3%. In Europe, the Stoxx 600 was up 3.8%, major stock indexes in Germany and France rose by over 4%, the UK’s FTSE 100 climbed about 3%, and Italy’s FTSE MIB advanced 3.7%.

Uncertainty returns after Trump’s address

The relief was tested as new communication from the White House introduced uncertainty about the conflict’s end state. U.S. stock futures fell on Thursday morning after a national address from Trump did not provide a definitive conclusion. S&P 500 futures dropped 1.1%, Nasdaq 100 futures fell 1.5%, and Dow futures declined 1%.

Oil jumped in response. West Texas Intermediate rose 7% to around $107 a barrel, and Brent climbed 7% to just above $108. In a social media update, Trump said Iran’s president had reached out regarding a ceasefire, but he stressed any agreement would depend on reopening the Strait of Hormuz.

Markets track conflicting signals on negotiations

As mixed signals continued, U.S. equities extended declines on Thursday. The S&P 500 fell 1.5%, the Nasdaq Composite dropped 2%, and the Dow fell 0.9%. Stocks recovered part of the drop mid-morning after reports said Iran had officially responded to the U.S. truce proposal.

Oil prices rose again amid the uncertainty, with Brent futures remaining above $102 and WTI briefly surpassing $14 before easing slightly. Another read-through from futures markets showed a cautious tone: Dow futures fell 283 points, or 0.6%, while S&P 500 futures slipped 0.7% and Nasdaq 100 futures dropped 0.8%.

Key data points investors tracked

Why this mattered for markets

The reported price swings captured how quickly oil can transmit geopolitical risk into broader financial conditions. When crude moved above $100 and headlines focused on the Strait of Hormuz, equity markets struggled as investors weighed inflation risks and the possibility of slower growth. When crude dropped sharply on ceasefire and truce signals, equities rallied as the immediate risk of an oil shock appeared to ease.

At the same time, the sequence of rallies and pullbacks showed that markets were not treating the situation as settled. Even after ceasefire and truce headlines, oil rebounded when official messaging suggested the conflict could continue and when the reopening of the Strait of Hormuz was framed as a condition for any lasting agreement.

Conclusion

Oil and equities moved sharply in response to changing signals from Washington and Tehran, with the Strait of Hormuz emerging as the key pressure point for supply concerns. The latest reported updates centered on a two-week pause in military action and the possibility of secure passage through the strait during that period. Investors will continue to watch for follow-through on the truce proposal, confirmation of shipping arrangements, and any further official statements that clarify whether negotiations are holding.