Brent crude reached $126 per barrel on Tuesday. By Thursday morning it was back near $110. The $16 reversal over 48 hours is the sharpest swing since the Hormuz crisis began in late February.
WTI traded around $106 at Thursday's open, down from highs above $112 earlier in the week.
What Drove the Spike
Trump confirmed on Tuesday that the US blockade of Iranian ports would remain in place until Iran agrees to nuclear terms, not just a reopening of the Strait of Hormuz. That statement closed off the partial resolution scenario markets had been pricing in: Iran reopens the strait, the US lifts the port blockade, prices fall.
With both the strait and Iranian ports now explicitly tied to nuclear conditions, traders repriced the extended-stalemate scenario. Goldman Sachs had identified $120 as its Q3 upside case. The market moved through that in under 48 hours.
What Drove the Pullback
Unnamed US officials told Reuters on Wednesday that Washington remains open to talks if Iran makes concessions on nuclear transparency. That is not a policy shift. It restates the existing US position. Markets treated it as a softening regardless, partly because $126 represented technically overbought territory by most measures.
A secondary factor: today is the 60-day deadline under the War Powers Resolution. A small portion of the market is pricing in the possibility that congressional pressure forces a policy change. That bet is almost certainly wrong, but it is keeping a thin layer of ceasefire premium alive.
The Range the Market Is Accepting
Brent at $110 is still roughly $12 above Goldman's stated Q2 base case. The market is not pricing in a resolution. It is pricing in a prolonged stalemate with periodic diplomatic noise moving prices in both directions within a wide band. The $110-to-$126 range seen this week may define trading conditions for the coming month.
The structural picture has not moved. Hormuz remains effectively closed, with commercial traffic at roughly 5 percent of pre-conflict levels. The IEA's 400-million-barrel reserve release is covering an estimated 15 percent of lost throughput. US shale output is rising slowly, with Permian Basin executives telling the Dallas Fed they expect only modest production increases through 2026 despite prices above $100.
What to Watch Next
Iran's formal response to the War Powers Act deadline is the next political signal. If Tehran reads today's deadline as an opening to press Washington for a withdrawal timeline, a counter-proposal could emerge. Silence confirms the stalemate and supports Brent staying in the $108-to-$115 range near term.
The upside scenario at $120-plus requires either a new military escalation or a concrete breakdown in ceasefire terms. The downside scenario below $100 requires a diplomatic breakthrough that neither side is currently offering.
This article is for informational purposes only and does not constitute financial or investment advice. Oil market conditions can change rapidly. Consult a qualified financial professional before making investment decisions.