(Bloomberg) – Brent crude futures topped $71 a barrel for the first time since August after U.S. President Donald Trump warned Iran to make a nuclear deal or face military strikes.
The global oil benchmark rose as much as 5.1%, while U.S. counterpart West Texas Intermediate topped $66 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.
In a social media post on Wednesday, Trump said that U.S. 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 MMbpd.
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.
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 U.S. 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.”
Trump has repeatedly issued warnings on Iran, but those have most recently been linked to Tehran’s deadly crackdown on protests rather than its nuclear activities. The U.S. president previously said the regime’s atomic program was “obliterated” in strikes in June that targeted three facilities.
In response, Iran has said it stands ready for dialogue but warned it would respond with unprecedented force if pushed. Tehran has stepped up diplomacy with key powers in the Middle East as it looks to head off more conflict with U.S.
