Oil Up 1% After Trump’s Iran Threat

Oil prices rose about 1% on Monday. Brent crude futures for September settled at $88.88 a barrel, after briefly topping $90, gaining 0.9%. U.S. West Texas Intermediate (WTI) September contracts settled at $82.48 a barrel, also up 0.9%. Both contracts posted their best weekly performances since April and the first week of the Iran war in early March.

The rally followed President Donald Trump’s Truth Social post stating that Iran will “pay” for the killing of three American service members, referencing a directive passed to Secretary of War Pete Hegseth and Chairman of the Joint Chiefs Daniel Caine. U.S. Central Command confirmed three service members were killed by Iranian attacks.

The U.S. and Iran have exchanged heightened rhetoric; the U.S. has conducted ten consecutive days of strikes on Iranian targets, while Iranian attacks have hit critical Gulf infrastructure and were reported by Kuwait and Bahrain. Iran’s deputy foreign minister for legal and international affairs, Kazem Gharibabadi, announced Tehran’s suspension of its interim peace‑deal commitments. State media quoted President Masoud Pezeshkian telling the Supreme Judicial Council that Iran is now in a “full‑scale war” with the United States.

Yemen’s Iran‑aligned Houthis announced a naval blockade of Saudi Arabia and a maritime embargo effective immediately, raising the risk of disruption in the Strait of Bab el‑Mandeb. Kpler data showed only 30 verified vessel crossings of the Strait of Hormuz over the weekend, with ANZ analysts noting transit volumes have fallen to single digits. Thierry Wizman of Macquarie explained that the U.S. aims to diminish reliance on the Strait by developing alternative pipelines through Iraq, Oman, Saudi Arabia, Syria and Turkey, thereby reducing Iran’s leverage and increasing China’s vulnerability.

Despite rising U.S. production, analysts said it has not materially altered the broader market balance, and global oil inventories continue to shrink, keeping crude and refined‑product markets tight.

U.S. Secretary of State Macro Rubio said the United States is open to talks with Iran and would be “happy” to pursue further discussions. Mediators have reportedly sent Iran a 10‑day cease‑fire proposal intended to revive the interim peace agreement signed in June, and an Iranian foreign‑ministry spokesperson confirmed receipt of the proposals.