Oil Rips Past $109 as Trump Vows Weeks More of War in Iran
Crude oil surged past $109 a barrel on Thursday after President Trump told the nation he expects the Iran conflict to last at least two to three more weeks, crushing hopes that a resolution was near and sending energy markets into their most volatile session since the war began in late February.
West Texas Intermediate jumped as high as $114 per barrel in early trading before settling around $109, a gain of roughly 9% on the day. Brent crude surged past $107, its highest level since 2022. The catalyst was unmistakable: Trump’s nationally televised address, in which he vowed to hit Iran “extremely hard” and bring the country “back to the stone ages.”
That language extinguished the fragile optimism that had powered the prior session’s rally in the S&P 500. The war trade is back on.
Why Did Markets Reverse So Sharply?
Just 24 hours ago, traders were pricing in a near-term ceasefire. Trump himself had told reporters he expected U.S. forces to leave Iran within weeks. The S&P 500 posted its best day of the quarter. Energy sold off. Banks rallied.
Thursday’s speech rewrote that narrative. Rather than signaling withdrawal, the president committed to an escalation. The Dow fell more than 600 points at its session low before a midday report from Iranian state media offered a temporary lifeline.
The S&P 500 dropped as much as 1.5% and the Nasdaq fell 2.2% at their worst levels. The VIX climbed to 25.77, reflecting a sharp uptick in investor anxiety. By the close, stocks had clawed back most of their losses, with major indexes finishing well off their lows but the damage to sentiment was done.
The Oman Protocol: A Glimmer or a Mirage?
The midday reversal came on a report from Iran’s state news agency IRNA that Tehran and Oman are drafting a protocol to “monitor transit” through the Strait of Hormuz. Kazem Gharibabadi, Iran’s deputy foreign minister for legal affairs, said the requirements “will not mean restrictions, but rather to facilitate and ensure safe passage.”
That was enough to pull the major indexes off their lows and briefly push them into positive territory. Oil prices retreated from their $114 highs.
But the details matter. The protocol would require all vessels passing through the strait to coordinate with Iranian and Omani authorities and obtain permits in advance. That is not the same as reopening the strait. It is closer to a formalization of the blockade under a diplomatic framework.
The Strait of Hormuz handles roughly 20 million barrels per day of oil flow, equivalent to about 20% of global petroleum liquids consumption. Only about 2.6 million barrels per day of pipeline capacity exists to bypass it, primarily through Saudi and UAE infrastructure. The math is simple: the strait stays closed, and the world stays short roughly 17 million barrels a day of seaborne transit capacity.
What This Means for Consumers and Investors
The national average gasoline price has already crossed $4.00 per gallon, up more than 30% since the conflict began. If WTI sustains levels above $105, analysts estimate pump prices could reach $4.50 by late April.
For investors, the energy trade that we flagged in yesterday’s post has reversed again. The sector rotation out of energy and into financials lasted exactly one session. Energy stocks surged on Thursday while the broader market struggled. The Russell 2000 managed a 0.88% gain, a divergence worth watching.
The ISM Prices Paid index at 78.3 already pointed to input cost pressures. Sustained oil above $100 feeds directly into that dynamic, raising inflation expectations and complicating the Federal Reserve’s path.
The Bigger Question
Two narratives are now competing in real time. One says the Oman protocol is the first step toward de-escalation, a face-saving mechanism that eventually restores shipping through the strait. The other says it is a stalling tactic that formalizes Iranian control over the world’s most important oil chokepoint while the war continues.
Markets will oscillate between these two readings until there is clarity. The U.S. stock market is closed Friday for Good Friday, which means traders have a long weekend to digest this. When futures open Sunday evening, the tone will likely be set by whatever developments emerge from the Gulf.
For now, the oil market is pricing in a war premium of roughly 20% above pre-conflict levels. Whether that premium grows or shrinks depends entirely on the next two to three weeks, exactly the timeline the president himself laid out.
Ferrante Capital LLC is a registered investment adviser. Information presented is for educational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Oil prices and market data cited reflect trading activity on April 2, 2026, and are subject to change. Forward-looking statements reflect the views of the author at the time of writing and may not materialize. Readers should consult a qualified financial professional before making investment decisions.