The tentative 60-day ceasefire deal that sat on Trump's desk Friday is still unsigned. Over the weekend, the diplomacy that drove oil down 20% gave way to the sharpest direct military exchange of the conflict. Iran shot down a US MQ-1 Predator drone. US Central Command struck Iranian radar, drone-control, and air-defense sites at Geruk and on Qeshm Island. Early Monday, a US Army base in Kuwait came under drone and missile fire.
Oil reversed. Brent crude rose 3.3% to $94.15. WTI gained 3.7% to $90.63. The rebound recovers part of last week's collapse, when ceasefire optimism drove Brent down roughly 20% from its 2026 highs to close Friday near $92.56. The market that priced peace on Friday spent Monday repricing war.
This is not a deal collapse. It is a deal stall, with shooting around it. The distinction matters for where prices go next.
What Happened Over the Weekend
Iran downed the US drone over what the US described as international waters. CENTCOM responded with what it called "measured and deliberate" self-defense strikes on Saturday and Sunday, hitting a ground-control station, destroying two attack drones, and striking air-defense and radar installations at Geruk and on Qeshm Island, the latter a strategically placed island near the center of the strait.
Iran's Revolutionary Guard said it "responded with an attack" and claimed to have destroyed a US-linked airbase. Iranian state television aired footage of ballistic missile launches. Early Monday, Kuwaiti air defenses engaged incoming missiles and drones aimed at the US Army Central forward command facility in Kuwait. The US military reported no troops injured. One account flagged damaged Reaper drones at the facility.
The exchange follows the pattern established the prior week, when the US shot down four Iranian drones in Hormuz and struck a launch site near Bandar Abbas. The difference this weekend is the directness and the geographic spread: strikes on Iranian soil, an Iranian strike reaching a US base in Kuwait.
Where the Deal Actually Stands
Trump has not signed the ceasefire extension and, by his own account, "has yet to decide." Iran says the deal "had not been finalized." The framework that looked close on Thursday is now frozen while both sides shoot.
Trump's public posture hardened sharply. He said he was "not satisfied" with Iran's position, accused Tehran of "negotiating on fumes," and described what he sees as Iran's strategy in his own words: "We'll outwait him. He's got the midterms." His bottom line was blunt: "We're not satisfied with it, but we will be, either that or we'll have to just finish the job." He also offered a softer aside that Iran "really wants to make a deal. It always does."
The nuclear sticking point that has defined the talks since early May never resolved. Washington's "no dust, no dollars" position holds that no sanctions relief flows until Iran's roughly 1,000 pounds of highly enriched uranium leaves the country. That demand, and Iran's refusal to meet it, is why the 60-day extension was a deferral rather than a settlement, and why a deferral was fragile enough to break under the weekend's fire.
Defense Secretary Hegseth said the US remained in a "good place" to reach an agreement and that the "ceasefire is not over." That framing, deal-still-alive despite active strikes, is the official US position and the reason oil rebounded only to $94 rather than spiking toward $110.
Why the Rebound Was Measured
A weekend of direct US-Iran strikes, an Iranian attack reaching Kuwait, and a stalled deal is, on its face, a setup for a much larger price move than 3 to 4 percent. The contained reaction reflects what the market has learned over the past month.
Each previous escalation in this conflict has been followed by a return to talks rather than a slide into full war. The April 8 ceasefire has technically held through every incident since, including the Barakah strike, the Bandar Abbas strikes, and now the Geruk and Qeshm strikes. Traders have repeatedly seen the worst-case scenario priced in, then unwound. That history caps how much risk premium any single weekend of fighting can add.
RBC's Helima Croft flagged the tail risk that gets underpriced in that complacency: "Washington could conceivably walk away and declare the war over," a scenario in which the US stops pursuing a deal and the conflict settles into an indefinite low-grade state with Hormuz permanently constrained. Equiti's Ahmed Al Juqqa put the counterpoint directly: "Every new strike weakens the market's belief in de-escalation and reminds traders that risk premium may have been reduced too early."
The $94 print is the market splitting the difference: war risk is back, but the base case is still that talks resume.
The Physical Picture Has Not Changed
Through all of it, the strait remains effectively closed. Roughly one fifth of global oil and gas normally transits Hormuz, and there is no evidence tankers are moving freely again. Trump claimed minesweepers were operating "at a tripled up level," but full mine clearance was estimated in April Congressional testimony to take around six months, and there is no confirmation that clearance under the deal has actually begun.
The US blockade of Iranian ports also remains in force. The administration had signaled lifting it as part of the deal, but over the weekend the US disabled another commercial vessel attempting to breach it. CENTCOM had turned away 94 vessels as of May 22. The blockade lifting was contingent on a signature that has not come.
In short, none of the supply-side facts that would actually lower prices, a de-mined strait, a lifted blockade, freely moving tankers, have materialized. Last week's selloff priced their arrival. This week's rebound prices the growing risk that they do not arrive on the timeline the market assumed.
What to Watch This Week
Three things will set the direction.
Whether Trump signs or walks. His "finish the job" language and Hegseth's "ceasefire is not over" language point in opposite directions. A signature sends Brent back toward the high $80s. A walk-away, or a major new strike, sends it toward $105 or higher.
The Kuwait escalation. An Iranian strike reaching a US base on the soil of a Gulf ally is a different category than incidents inside the strait. How Washington and Kuwait respond determines whether this widens.
OPEC+ on June 7. The group meets into this uncertainty with Hormuz still choked and prices whipsawing in a $15 range. The cautious path is to hold, citing instability. Any signal on production policy lands directly on a market with no stable floor.
The deal is not dead. But the weekend proved how little is actually holding it together.
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.