Oil surged to its highest level in six months after Trump warned Iran of “bad things” if talks fail, sending a wave of volatility through global energy markets and putting traders on edge.
Crude prices hovered close to half-year highs on Friday as investors reacted to strong rhetoric from U.S. President Donald Trump, who cautioned Tehran that severe consequences would follow if negotiations over its nuclear program collapse.
International benchmark Brent Crude futures for April delivery slipped 0.5% to $71.33 per barrel by early afternoon in London, trimming earlier gains. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures for March delivery eased 0.5% to $66.07 per barrel.
Despite the modest pullback, both contracts had settled at their strongest levels in six months during the previous session, fueled by concerns about potential supply disruptions in the Middle East.
Diplomatic Talks Under Pressure
This week, U.S. and Iranian officials met in Switzerland in an attempt to break the deadlock surrounding Tehran’s nuclear ambitions. Early signs of progress, however, quickly gave way to renewed tensions, with Washington claiming Iran had failed to meet key U.S. demands.
Speaking at a meeting of his Board of Peace in Washington, Trump made his position clear, warning that “bad things will happen” if Iran refuses to reach an agreement. He later told reporters aboard Air Force One that he wants a resolution within “10 to 15 days,” suggesting a short timeline before further action could be considered.
His remarks follow a reported buildup of U.S. military assets in the region and speculation that the White House could authorize additional strikes if diplomacy falters.
Trump also stated that Iran’s nuclear capabilities had been “totally decimated” by U.S. strikes last June but hinted that further measures could still be on the table, without offering specifics.
Iran Signals Readiness to Respond
Iran has responded with firm language of its own. In a letter reportedly sent to U.N. Secretary-General António Guterres, Tehran warned it would react “decisively” to any military aggression.
Recent days have seen Iran conduct military exercises in the strategically crucial Strait of Hormuz — a vital corridor for global oil shipments — as well as joint naval drills with Russia in the Gulf of Oman.
Daniel Shapiro, a former U.S. ambassador to Israel, suggested that military preparations appear to be in place should strikes be ordered. However, he noted that the president seems to be waiting to see whether Iran is willing to make concessions before taking that step.
Shapiro expressed skepticism that Tehran would agree to the sweeping demands reportedly being sought, indicating that a key decision may loom in the coming days.
A “Very Well Supplied” Market — For Now
While geopolitical risk has dominated headlines, some analysts argue that underlying oil market fundamentals remain stable.
Martijn Rats, chief commodity strategist at Morgan Stanley, described the global oil market as “very well supplied.” However, he pointed to three forces currently supporting prices:
Mounting concerns over Iran.
Significant stockpiling activity by China.
Elevated freight costs.
Among these, the Iran factor stands out as the most influential driver of recent gains.
Strategists at Barclays noted that equity markets have so far absorbed the geopolitical noise with relative calm. However, they cautioned that rising tensions — including recent criticism from Vice President JD Vance — could alter investor sentiment if the situation escalates further.
Conflict Likely to Be Limited?
According to analysts, any potential military action would likely be narrowly targeted and short-lived, similar to previous strikes on nuclear and missile facilities.
With midterm elections approaching and the administration focused on keeping consumer costs in check, prolonged disruption in oil markets may not be politically palatable. Extended spikes in fuel prices — or sustained military engagement — could carry significant economic and political consequences.
For now, traders remain watchful. The next 10 to 15 days could prove decisive not only for U.S.–Iran relations but also for the direction of global oil prices.
