Oil prices surged sharply on Monday after President Donald Trump cast doubt on the possibility of extending the expiring ceasefire with Iran, stating, “They want to make a deal, but they’re not going to make the kind of a deal that I feel is necessary” [1]. Following Trump’s comments, the international oil benchmark Brent crude jumped above $91 per barrel, closing the trading session up 2.65% at $90.87. U.S. crude oil also rose by 2.5% to close at $84.50 per barrel, with the price spike occurring after a period of flat trading earlier in the day [1].
The national average price of unleaded gasoline reached $4.06 per gallon on Monday, marking a 36% increase since the Iran war began. Oil prices are now almost 50% higher than at the start of the year and more than 25% higher since February 28, when the conflict started [1]. The volatility in oil prices has persisted since a 60-day memorandum of understanding was signed with Iran in June, with prices briefly falling to near pre-war levels in early July before rebounding amid ongoing hostilities [1].
Treasury yields also responded to the geopolitical uncertainty, with the 10-year yield rising to 4.72% and the 30-year U.S. government bond yield climbing above 5.3%, its highest level since June 2007 [1]. Stock indexes extended their declines, with the S&P 500 ending the day down 0.5% and the Nasdaq closing lower by about 0.3% [1].
President Trump asserted that U.S. forces “control” the critical Strait of Hormuz through a naval blockade, claiming, “We have total control over the Strait.” However, this statement did not align with shipping data, which showed only three ships crossing the Strait on Sunday and ten on Saturday, with overall traffic last week down 19.5% from the prior week and far below the pre-war average of 130 ships per day [1]. Trump also made aggressive remarks regarding Oman, stating in a Fox News interview, “If Oman gets in the way, we’ll bomb the s---- out of them” [1].
Recent reports indicate that several oil tankers have been attacked in recent days, further contributing to market anxiety and price volatility [1]. The administration has maintained that oil prices would fall dramatically after the war ends, but with no end in sight to the fighting, prices remain elevated [1].
CONCLUSION
President Trump’s skepticism toward a new Iran ceasefire deal and heightened geopolitical tensions have driven oil and gas prices sharply higher, with significant impacts on bond yields and equity markets. The ongoing conflict and disruptions in the Strait of Hormuz continue to fuel market volatility, with no immediate resolution in sight.