Crude oil prices today are slipping, surprisingly, despite a weekend of U.S. airstrikes on Iranian nuclear sites and fears over retaliation in the Strait of Hormuz.
Oil prices are usually the first to react to geopolitical chaos, but not today. Despite the U.S. launching military strikes on Iranian nuclear facilities over the weekend, crude oil prices fell Monday, as investors shrugged off the threat of supply disruptions and focused on broader market signals.
West Texas Intermediate (WTI) crude dropped 0.2% by midday, while Brent crude slipped below $77 a barrel. Both benchmarks had briefly surged overnight, touching highs not seen since January, before pulling back sharply.
So why the reversal?
Markets Betting on Containment
Investors appear confident that the situation in the Middle East, while tense, won’t spiral into a full-blown oil crisis. “Markets only care about supply shocks,” said Jamie Cox, managing director at Harris Financial Group. “As long as actual supply disruptions don’t materialize, we’ll continue to see equity markets move higher, even if bombs are dropping.”
Others echoed the same sentiment. Adam Crisafulli of Vital Knowledge noted that Iran’s military capabilities have been degraded and the nation remains internationally isolated, reducing the likelihood of a coordinated escalation. “There’s a sense that even if Iran retaliates, it’ll be measured,” he said.
Trump’s Influence on Oil Messaging
In a post on Truth Social, President Donald Trump told energy markets to hold steady. “Everyone, keep oil prices down,” he wrote, adding that spiking prices would “play into the hands of the enemy.” He also called on the Department of Energy to ramp up drilling, writing “DRILL, BABY, DRILL!!! And I mean NOW!!!”
Those comments sent a clear signal: U.S. oil supply isn’t going anywhere, and that matters when you’re dealing with fears of disruption elsewhere.
Strait of Hormuz Still a Flashpoint
Roughly 20% of the world’s oil supply flows through the Strait of Hormuz, making it one of the most critical oil chokepoints globally. Any attempt by Iran to close or restrict movement through the area would likely send prices skyrocketing.
So far, Iran has held back. But analysts remain cautious. “The moment Iran moves to block the strait, all bets are off,” one oil strategist told CNBC. U.S. Secretary of State Marco Rubio urged China, Iran’s top oil customer, to intervene and keep the trade route open.
What to Watch This Week
Investors will be watching three key indicators:
- Any sign of Iranian retaliation that targets oil infrastructure
- Federal Reserve signals, especially after Michelle Bowman’s support for rate cuts in July
- Official oil inventory reports to gauge global supply strength
Until then, the market seems oddly calm for what could have been a major oil shock headline day.
Leo Cruz brings sharp insights into the world of politics, offering balanced reporting and analysis on the latest policies, elections, and global political events. With years of experience covering campaigns and interviewing world leaders, Leo ensures readers are always informed and engaged.
