Market News

(Bloomberg) -- Brent crude futures settled above $70 a barrel for the first time since July after US President Donald Trump warned Iran to make a nuclear deal or face military strikes.

The global oil benchmark rose 3.4% on Thursday, marking a third straight day of gains, while US counterpart West Texas Intermediate topped $65. Oil prices climbed amid the renewed risk of conflict that could disrupt crude exports out of Iran or ripple effects across global markets if a critical shipping route is blocked.

Trump in a social media post on Wednesday said US ships he ordered to the region were ready to fulfill their mission “with speed and violence, if necessary.” The commodity rallied even higher after the Associated Press reported that Iran issued a warning to ships at sea that it planned to run a drill next week that would include live firing in the Strait of Hormuz, citing two Pakistani security officials and the EOS Risk Group.

The report stoked fears of a potential closure of the narrow passage that separates Iran and the Arabian peninsula, through which about a fifth of the world’s oil passes. Iran itself accounts for about 3% of global supply, producing roughly 3.3 million barrels per day.

Crude has rallied so far in 2026, countering expectations for a market pressured by significant oversupply. Instead, geopolitical tensions from Iran to Venezuela and major supply disruption in Kazakhstan have helped to bolster prices.

Prices eased off of intra-day highs Thursday after equities weakened and the dollar briefly surged, before paring gains, making commodities prices in the currency less attractive. Oil has been trading more closely in tandem with the US dollar amid concerns over currency debasement.

Trump’s latest threats have injected a risk premium into prices. Bullish call options have been more expensive than bearish puts for the longest stretch in about 14 months as traders seek to protect against the risk of a new confrontation between the US and Iran. Bullish option additions have also grown at the fastest pace in at least six years.

“The potential for Iran getting hit has escalated the geopolitical premium of oil prices by potentially $3 to $4 a barrel,” Citigroup analysts including Anthony Yuen said in a note. “Oil prices can stay more elevated than many had expected, despite markets starting the year anticipating large oversupply.”