Tensions between Iran and the United States escalated as Iran's military issued a warning of a powerful attack on predetermined targets in response to repeated threats by U.S. President Donald Trump [1]. Iran stated that if the U.S. maintains the 'shadow of war,' it should consider the Strait of Hormuz effectively closed, and threatened to use force to break any blockade, refusing to reopen the strait while a naval blockade persists [1].
In the immediate aftermath of these threats, the price of West Texas Intermediate (WTI) crude oil surged by 4.98% to $89.80 per barrel [1]. However, oil prices later edged lower as uncertainty grew over the trajectory of the U.S.–Iran conflict, following President Trump's decision to extend a fragile ceasefire with Tehran [2]. On Wednesday, WTI futures declined 0.29% to $89.04 per barrel, while Brent crude fell 0.68% to $97.81 per barrel [2].
President Trump announced that the U.S. would prolong its temporary truce with Iran beyond the previously set deadline, citing a 'seriously fractured' political situation within Tehran. The ceasefire will remain in place until Iranian leaders present a unified proposal to end hostilities with Washington and Israel, while the U.S. continues its blockade of Iran's ports [2]. This extension delays the risk of imminent military strikes but also highlights deep divisions within Iran's leadership and the absence of a clear diplomatic breakthrough [2].
Earlier, oil prices had risen after it was revealed that U.S. Vice President JD Vance had not departed for Pakistan, where peace talks with Iran were scheduled to resume. However, Iranian negotiators informed their U.S. counterparts, via an intermediary in Pakistan, that they would not attend further talks, with Iranian state news outlet Tasnim reporting that 'attending the negotiations is a waste of time because the US prevents reaching any suitable agreement' [2].
CONCLUSION
The ongoing U.S.–Iran tensions and military threats from Iran have led to significant volatility in oil prices, with initial spikes followed by declines as a fragile ceasefire was extended. The lack of diplomatic progress and continued U.S. blockade contribute to persistent uncertainty in the oil market.