Oil Prices Rise Because Iran War Isn't Like Liberation Day

• Oil futures show U.S. crude remaining above $80 through September, with Brent climbing to $103.51, suggesting markets expect prolonged disruption despite Trump's five-day ceasefire attempt
• The Strait of Hormuz now operates at about half capacity (10 million barrels per day vs. 20 million pre-war), with Iran selectively allowing ships through while attacking regional infrastructure
• Iran's deputy parliamentary speaker stated the country will not negotiate or 'return the Strait of Hormuz to its previous state,' undermining the 'TACO' (Trump Always Chickens Out) optimism that worked during the April tariff reversal

Market Summary: Oil Prices Rise Amid Iran Conflict Uncertainty

Key Developments

U.S. crude oil prices rebounded above $90 per barrel on Tuesday morning, rising 4.87% to $92.42, following volatility triggered by uncertainty over Iran negotiations. Brent crude climbed 3.6% to $103.51 in Europe. Prices had spiked above $100 (U.S.) and $113 (Brent) on Monday before dropping to $88 and $100 respectively after President Trump posted about potential diplomatic breakthrough. Futures markets indicate oil will remain above $80 through September.

Geopolitical Situation

With four days remaining in Trump's five-day ceasefire, Iran shows no signs of cooperation. Iran's military spokesman vowed to fight "until complete victory," while Parliament's deputy speaker stated Iran won't negotiate or "return the Strait of Hormuz to its previous state." Israel continues attacks despite the ceasefire.

Trump's proposed deal would remove Iran's enriched uranium in exchange for reopening the Strait of Hormuz and abandoning nuclear ambitions, but analysts note this requires Iranian cooperation—unlike his previous tariff reversal.

Market Impact

The Strait of Hormuz blockade has reduced oil flow from 20 million barrels daily (20% of global consumption) to approximately 10 million. Iran allows some shipments through, primarily to China, while Saudi Arabia increased Red Sea pipeline shipments to bypass the Strait.

The S&P 500 fell 0.6% Tuesday morning, remaining 5.7% below its January 27 high. Energy stocks dominated gainers, with APA and Expand Energy up over 4%. The United States Oil Fund (USO) rebounded 3%.

Abu Dhabi National Oil Company CEO called Iran's actions "economic terrorism," potentially pushing regional neighbors toward a coalition to reopen shipping routes.