Crude oil prices surged past $90 a barrel after a two-month window for negotiations between the United States and Iran expired without progress, triggering renewed military exchanges and rattling global energy markets.
Brent crude rose above $90 for the first time since late July, reaching $91.63 by Tuesday morning. The escalation came after Iran signaled it would adopt a more aggressive military stance if talks failed, while President Donald Trump demanded Tehran "put up the white flag of surrender" in a Fox News interview. Trump also threatened to bomb Oman if it interfered with his efforts to resolve the conflict, marking the second time he has directed such a threat at the U.S. strategic partner.
The prospect of expanded conflict alarmed energy analysts watching the Strait of Hormuz, a critical chokepoint for global oil shipments. Roughly a quarter of all seaborne oil normally passes through the waterway. An Iranian military official warned that vessels attempting transit would "find several beautiful holes in their hulls," and a cargo ship was attacked while traveling through the strait early Tuesday.
Ship traffic through the strait plummeted as tensions mounted. Just six cargo vessels transited on Monday, according to ship tracking company Kpler, compared to only five combined on Saturday and Sunday. Angeline Ong, a senior technical analyst at IG, suggested Trump's threat against Oman could mark a turning point for oil markets. "If Muscat pulls back from talks with Tehran, the diplomatic route to restoring normal flows through Hormuz narrows considerably," Ong said, adding that investors might shift from betting on temporary disruption to pricing in prolonged supply problems.
Deutsche Bank analysts interpreted the rising oil prices as evidence that investors were preparing for an extended closure of the strait. The economic consequences rippled across markets. U.S. gasoline prices remained elevated at 37 percent higher than before the conflict began, continuing to pressure household budgets and inflation. Bond yields climbed to multi-year highs as investors reassessed growth and inflation expectations.
Trump indicated he was not rushing to end the conflict, telling Fox News he had "no time schedule" and was "not in a hurry" to reach a deal, despite claiming months earlier that resolution was imminent.
Geopolitical strategists warned of compounding risks. Dan Alamariu at Alpine Macro cautioned that escalation through the fall could produce a "double shock" if combined with Russia's ongoing war in Ukraine. He predicted energy market volatility would spike with sustained, intense Middle East conflict, particularly affecting oil and gas prices.
The developments prompted G20 finance officials to convene in the United States for meetings centered on the economic fallout from the Iran conflict.