Trump's Hormuz takeover plan sends oil up 4%, bitcoin toward $62,600

The US-Iran military escalation over the Strait of Hormuz pushed crude oil above $85 a barrel and drove bitcoin to a two-week low as traders priced in a prolonged supply disruption.

President Donald Trump said the US would take control of the Strait of Hormuz after trading drone and missile strikes with Iran, sending Brent crude up 4% to $85.70 a barrel and bitcoin down 3.2% to $62,600 on Monday.

"The market is pricing in a worst-case scenario where 20% of global oil supply is disrupted for weeks, not days," said Amrita Sen, founder of Energy Aspects. "A US takeover doesn't eliminate the risk — it shifts it."

The US military launched multiple waves of strikes after Iran attacked a container ship in the waterway, setting it ablaze. Iran responded by announcing the closure of the strait — a claim US officials rejected. Gold rose 1.2% to $2,458 an ounce, while the S&P 500 fell 0.8% as defense stocks gained. The VIX, Wall Street's fear gauge, climbed to 24.6.

The Strait of Hormuz handles about a fifth of the world's oil trade. A sustained disruption could push crude toward $100 a barrel, reigniting global inflation and forcing central banks to delay rate cuts. The last comparable escalation — Iran's 2019 downing of a US drone — sent oil up 12% over two weeks before tensions eased.

Oil's Risk Premium Widens

Brent crude's jump to $85.70 marks the biggest single-day gain since the outbreak of the Israel-Hamas war in October 2023. Options markets are pricing a 35% probability that oil touches $100 within the next month, according to data from ICE Futures Europe. The premium of Brent futures one month out over those expiring in 12 months — a measure of near-term supply anxiety — widened to $8.40 a barrel, the highest since March 2022.

Trump's demand for a tariff on Iranian oil shipments through the strait adds another layer of complexity. The US president said Washington would reinstate a blockade of Iranian shipping in the Gulf, a move that risks drawing retaliatory strikes on commercial vessels. Iran's Revolutionary Guard has previously threatened to target any ship it deems to be violating its territorial claims.

Dubai Explores a Bypass

Dubai is considering an alternative route for oil shipments that would bypass the Strait of Hormuz entirely, according to people familiar with the matter. While details remain scarce, any such bypass would require years of infrastructure development and billions of dollars in investment. The mere discussion signals that Gulf states are preparing for a prolonged period of instability in the waterway.

Bitcoin's slide toward $62,600 reflects the broader risk-off mood rather than crypto-specific factors. The token has moved in near lockstep with the S&P 500 over the past two weeks, with a 30-day correlation coefficient of 0.72, according to CoinMetrics. A break below $62,000 would open the door to the $58,000 support level last tested in May.

The last time the Strait of Hormuz faced a comparable threat was in 2019, when Iran downed a US drone and the US came within minutes of retaliatory strikes. Brent crude surged 12% over the following two weeks before diplomatic channels reopened. This time, the scale of military engagement — including drone and missile exchanges — suggests a higher escalation ceiling, with no clear off-ramp in sight.

This article is for informational purposes only and does not constitute investment advice.