Oil jumps back to $115 a barrel as the Iran war widens again

Trump threatened on Truth Social to destroy Iranian power plants and oil wells if the Strait of Hormuz isn't reopened to tankers

David McNew / Getty Images

Monday's session opened with Brent crude at nearly $116 a barrel — a new high for the ongoing conflict — while West Texas Intermediate reached about $102.

The price surge coincided with a weekend of deteriorating conditions: Iran-aligned Houthi forces in Yemen launched ballistic missiles at Israel, while an additional 3,500 U.S. troops deployed to the region, completing the conflict's first month, according to NBC News.

President Donald Trump posted on Truth Social Monday that the U.S. is in talks with what he called "a new, and more reasonable, regime" in Iran. In the same post, Trump threatened to obliterate Iranian power plants, oil wells, Kharg Island, and possibly all desalination plants if negotiations collapse and the Strait of Hormuz — a chokepoint accounting for roughly 20% of global oil flow — stays blocked.

Aboard Air Force One late Sunday, Trump told reporters the two sides "will make a deal," according to NBC News. Trump said Tehran had accepted most terms of a 15-point U.S. proposal — though Iran had not publicly acknowledged the claim — while also predicting 20 boatloads of oil would begin moving through the strait on Monday. Trump separately told the Financial Times the conflict could end "fairly quickly," according to NBC News.

Not all market participants were convinced, with some growing skeptical about whether Trump's statements reflect actual progress on the ground, according to NBC News.

AAA recorded a national gasoline average of $3.99 a gallon Monday, the steepest pump price since the summer of 2022. Diesel had reached $5.42 a gallon by Sunday, 44% above its pre-war level, according to The New York Times. Patrick De Haan, Gas Buddy's chief analyst, estimated U.S. motorists would soon have racked up an additional $10 billion in gasoline costs since fighting began. Bloomberg News reported that government officials and financial analysts are now weighing the possibility of crude reaching $200 a barrel.

Index futures for U.S. equities pointed to gains at the open. European markets edged higher, with the Stoxx 600 gaining 0.6%, even as equities across Asia retreated — Japan's Nikkei 225 fell 2.8% and South Korean stocks dropped 3% — according to The New York Times.

Monday's energy market moves echo a dynamic that took hold the prior week, when an all-caps Trump post on Truth Social asserting that direct talks were underway triggered a rally in futures and sent oil prices lower. The Wall Street Journal subsequently established that no direct U.S.-Iran contact had occurred — only back-channel efforts by regional go-betweens still searching for Iranian counterparts open to talks.

Mohammad-Bagher Ghalibaf, Iran's parliamentary speaker and a figure the U.S. has reportedly targeted for diplomatic outreach, wrote on X $TWTR ahead of Monday's open, telling American investors to invert every Trump statement about the war — treating presidential announcements as a contrary signal for trading. The post had drawn 8 million views as of the time of publication.

📬 Sign up for the Daily Brief

Our free, fast and fun briefing on the global economy, delivered every weekday morning.

© Quartz