Oil Rises on U.S.-Iran Strait of Hormuz Fears

Oil futures pushed higher Thursday as traders kept a wary eye on the Strait of Hormuz, CNBC reported, citing renewed uncertainty over U.S.-Iran negotiations and the waterway’s continued disruption.

Brent crude for July delivery rose 0.67% to $101.95 a barrel. U.S. West Texas Intermediate for June gained 0.65%, settling near $95.70. Both benchmarks have remained elevated since the U.S. launched its military campaign, known as Operation Epic Fury, against Iran.

Trump Raises Stakes on Iran Peace Talks

President Donald Trump escalated his rhetoric Wednesday, warning that Iran would face bombing “at a much higher level” if it refused to accept a proposed peace framework. The statement came despite reports from Axios that Washington and Tehran had nearly finalised a 14-point memorandum of understanding to end hostilities.

Trump indicated on Truth Social that U.S. forces would stand down and lift a naval blockade of Iranian ports in the Gulf of Oman if a deal was struck. That move, he wrote, would reopen the Strait of Hormuz to all shipping including Iranian vessels. The conditional language, however, left markets unsettled.

Iran’s Response Remains Cautious

Iranian Foreign Ministry spokesperson Esmaeil Baqaei said Tehran was still reviewing the proposal and would relay its position to mediators in Pakistan. In a subsequent post on X, Baqaei stressed that genuine negotiations require good faith and cannot amount to dictation or coercion, citing international court precedent.

The exchange underscored how fragile the diplomatic process remains, even as both sides appear to acknowledge a framework exists.

Background: Why the Strait Matters So Much

The Strait of Hormuz is the world’s most critical oil chokepoint. Roughly 20% of global petroleum supply passes through the narrow passage between Iran and Oman. Disruptions there ripple immediately into energy prices and broader economic forecasts.

Citi U.S. equity strategist Scott Chronert told CNBC’s Squawk Box that the length of the conflict carries outsized economic weight. A prolonged period of elevated oil prices, he argued, would reshape growth expectations across multiple market sectors and complicate the Federal Reserve’s thinking on interest rate policy.

Former U.S. Ambassador to Oman Marc Sievers told CNBC that reopening the strait fully, without any toll imposed by Iran’s Islamic Revolutionary Guard Corps on passing tankers, has been the central objective of talks from the outset.

Traders are now watching whether Tehran’s formal response to mediators shifts the diplomatic calculus before markets open in New York.

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