Oil tops $100 as Trump’s whipsaw Iran policy confuses markets

Oil prices jumped more than 7% to over $100 a barrel after President Trump followed a brief cease-fire with a threat to blockade the Strait of Hormuz, injecting fresh volatility into markets.

"The reversals of recent weeks have exhausted even seasoned investors," Karen Young, a senior fellow at the Middle East Institute, told CNN. "It could be a long time from now before the war ends and oil prices come down."

Brent crude, the international benchmark, rose over 7% to settle near $102 a barrel, while West Texas Intermediate climbed by a similar margin to around $104 a barrel. The move pushed the global oil benchmark up 40% since the start of the Iran conflict. U.S. gasoline prices have followed, averaging $4.13 a gallon.

The blockade, aimed at cutting off Iran's oil exports which account for roughly 4% of world supply, risks escalating the conflict and further tightening global energy markets. The uncertainty has whipsawed investments and has analysts questioning the stability of any diplomatic overtures.

The U.S. Central Command confirmed it would implement a naval blockade of all maritime traffic to and from Iranian ports starting Monday. The move follows the collapse of peace talks over the weekend and is designed to cut off a crucial source of funding for Tehran's government, which earned an estimated $45 billion from oil exports last year.

Markets React to Heightened Risk

The renewed tension hit equity markets, with futures for the S&P 500, Dow, and Nasdaq all pointing to a weaker opening. Asian and European indices also traded lower. "Given the continued threat of Iranian attack against any ships that don't pay the toll, the US blockade announcement will further discourage shipping through the strait," analysts with the Eurasia Group said in a note.

President Trump's pronouncements have created a volatile trading environment. A chart from the Wall Street Journal shows crude oil futures swinging wildly in response to his social media posts, from a dip on a cease-fire announcement to a sharp spike on the blockade threat. Some investors note that the market swings are diminishing with each reversal, suggesting a growing weariness and disbelief of the president's statements.

China's Role

The blockade puts China, a major importer of Iranian oil, in a difficult position. "In pursuing this strategy, President Trump may be calculating that China will become more active in negotiations if it faces a cutoff of Iranian cargoes to its refineries," RBC Capital Markets' Helima Croft wrote in a note. Iran's oil exports to China have been a key factor in the global energy market, and a disruption could have far-reaching consequences.

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