US President Donald Trump signalled on Monday that the war with Iran could end soon, briefly easing fears in global energy markets. Oil prices fell after his remarks suggested that the conflict might be approaching a turning point. Yet within hours, Trump struck a sharply different tone, warning that Iran would face devastating retaliation if it attempted to disrupt shipping through the Strait of Hormuz, one of the world’s most critical energy corridors.
The conflict between the United States, Israel and Iran has already severely disrupted traffic through the Strait of Hormuz, the narrow waterway linking the Persian Gulf to the Gulf of Oman. Under normal circumstances, about 13 million barrels of oil pass through the strait each day, accounting for roughly a third of global seaborne oil trade and around a fifth of the world’s total consumption.
For decades the strait has functioned as the lifeline of global energy markets, enabling crude exports from Saudi Arabia, Iraq, the United Arab Emirates, Kuwait and Iran to reach customers in Asia, Europe and beyond. But since the war escalated, commercial shipping through the passage has slowed dramatically, with several shipping companies suspending operations and insurers sharply raising premiums for vessels entering the region.
Tehran has increasingly signalled that it is willing to use the strategic waterway as leverage in the war. Iranian officials have warned that continued American and Israeli strikes could trigger retaliatory measures that would make navigation through the strait extremely dangerous.
Esmail Baghaei, spokesperson for Iran’s foreign ministry, issued a pointed warning to vessels currently passing through the waterway, saying oil tankers must be “very careful” in the prevailing security environment. According to Baghaei, as long as the region remains unstable, maritime traffic cannot be guaranteed safe passage.
The Islamic Revolutionary Guard Corps has taken an even harder line. In a statement issued during the latest escalation, the force declared that Iran would not allow the export of “one litre of oil” from the Gulf if military attacks on Iranian territory continued. The message was blunt: regional security would exist either “for everyone or for no one”.
Ali Larijani, one of Iran’s most senior political figures and a key member of the country’s security establishment, reinforced that message. He warned that lasting security in the Strait of Hormuz was unlikely while the United States and Israel continued military operations against Iran.
Washington has responded with increasingly stark warnings of its own. Trump’s latest statement suggested that any Iranian attempt to block the strait would trigger overwhelming retaliation by US forces. The president has framed the defence of the waterway as essential not only for the United States but also for countries that depend heavily on Middle Eastern oil supplies. In one remark to reporters, he described the continued flow of energy through the strait as effectively a “gift” from the United States to countries such as China that rely on Gulf oil shipments.
Trump has also floated the idea of direct American control over the waterway, telling journalists he was “thinking about taking it over” to guarantee safe passage for global shipping. He added that if Iran tried “anything cute”, it could face total destruction.
At the same time, Trump has attempted to project confidence that the conflict itself may not drag on indefinitely. Speaking to reporters, he suggested that the military campaign was already “very complete, pretty much” and “ahead of schedule”. Yet his remarks have also created confusion, as he simultaneously described the situation as only “the beginning of building a new country”.
The uncertainty has been reflected in global financial markets. When fears first spread that shipping through the Strait of Hormuz might be halted, oil prices surged dramatically. Brent crude rose by more than 25 per cent at one stage, briefly approaching $120 a barrel as traders scrambled to price in the potential loss of millions of barrels of daily supply.
Gas prices also spiked, with month-ahead deliveries rising by nearly a quarter and doubling compared with levels before the conflict began. The shock rippled through global stock markets, with major indices across Asia, Europe and the United States falling amid fears of renewed inflation and the possibility that central banks might delay expected interest rate cuts.
Trump’s latest comments, however, triggered a swift reversal. After he warned Iran against blocking the strait and suggested the conflict could end soon, oil prices dropped by roughly 10 per cent, falling below $90 a barrel. Stock markets also recovered some of their earlier losses.
Despite the brief respite, analysts say the situation remains extremely fragile. Energy traders describe the market as being locked in a “tug of war”, with prices swinging sharply in response to each new military or political development. Shipping firms are continuing to demand steep risk premiums for vessels entering the Gulf, reflecting the persistent threat of attacks or blockades.
Governments around the world are now scrambling to contain the fallout. The Group of Seven nations and the International Energy Agency recently held an emergency virtual meeting to discuss potential measures to stabilise global supply.
Although a final decision has not yet been announced, the G7 issued a statement saying members “stand ready to take necessary measures”, widely interpreted as signalling a coordinated release of strategic petroleum reserves.
According to officials familiar with the discussions, the United States has proposed a joint release of between 300 million and 400 million barrels of oil from emergency stockpiles. Such a move would represent roughly a quarter to a third of the combined public reserves held by the group.
Britain’s chancellor, Rachel Reeves, has publicly supported the proposal while calling for immediate de-escalation and guarantees for the safety of commercial vessels. At the same time, military preparations are quietly underway to secure the waterway if conditions allow. French President Emmanuel Macron said France and its partners were preparing a “purely defensive” naval mission that could eventually escort merchant vessels and help reopen the Strait of Hormuz once the most intense phase of the conflict subsides.