Stramtoarea Hormuz, Golful Oman, Iran. Credit line: Iranian Army Office / Zuma Press / Profimedia
Geopolitical tensions are immediately felt in the oil market, and when Iran is involved, the reaction is swift.
Crude oil prices rose approximately 4% on Wednesday after U.S. Vice President J.D. Vance accused Tehran of disregarding key U.S. Demands during recent nuclear talks and stated that military action remains an option. Concerns were further fueled by a report from Axios suggesting former President Trump was nearing a decision to engage in military conflict with Iran.
West Texas Intermediate (WTI) crude futures traded in the U.S. Increased by 4.25%, reaching $64.98 per barrel, while Brent crude rose 3.93% to $70.07. This increase contrasts sharply with the previous session, when markets had moved lower anticipating a potential agreement from the Geneva negotiations, according to reporting from Greek financial news outlet Naftemporiki. The price swings highlight the market’s sensitivity to geopolitical risk.
Washington’s “Red Lines”
Vice President J.D. Vance stated that while continued contact was agreed upon, the Iranian side had not acknowledged or substantially addressed the “red lines” established by President Donald Trump regarding the country’s nuclear program.
Conversely, Iranian Foreign Minister Abbas Araghchi described the discussions as “constructive,” referencing a preliminary agreement on basic principles. This disparity in interpretation is evident – and markets responded to the firm U.S. Rhetoric alongside reports indicating Iranian preparations.
J.D. Vance emphasized that President Trump reserves the right to employ military force if diplomacy fails. The message was clear: negotiations have limits.
Strait of Hormuz in Focus
The tension extends beyond statements. Iran conducted military exercises in the Strait of Hormuz, the primary maritime passage for roughly one-third of the world’s seaborne crude oil exports. This chokepoint is the most critical on the global energy market.
Iranian state media reported that some maritime traffic was temporarily affected by the exercises, although ship-tracking companies have not confirmed any substantial disruptions. However, in the oil market, the *possibility* of disruption is enough to trigger a strong reaction.
Simultaneously, the U.S. Has increased its military presence in the Middle East. The USS Abraham Lincoln is already in the region, while the USS Gerald Ford is en route. President Trump stated that deploying a second aircraft carrier serves as a guarantee should negotiations collapse.
Energy markets react not only to events, but also to potential scenarios. A military incident impacting flows through the Strait of Hormuz could lead to a significant contraction in supply, with direct effects on fuel prices and global inflation.
Today’s increase in oil prices doesn’t reflect a crisis that has already occurred, but rather the growing possibility of an escalation that could reshape the global energy balance.
For now, diplomacy continues. But as long as “red lines” remain unresolved and warships gather in the Persian Gulf, the market will likely continue to trade on fear – not calm.
