Oil markets on edge over Trump’s deadline to hit Iran

Global oil markets are treading cautiously as a high-stakes deadline set by U.S. President Donald Trump for Iran expires, raising fears of a fresh escalation in the Middle East conflict. Despite mounting geopolitical tension including threats of strikes on Iranian infrastructure if Tehran fails to comply, oil prices have remained relatively steady, creating an uneasy […]

Global oil markets are treading cautiously as a high-stakes deadline set by U.S. President Donald Trump for Iran expires, raising fears of a fresh escalation in the Middle East conflict.

Despite mounting geopolitical tension including threats of strikes on Iranian infrastructure if Tehran fails to comply, oil prices have remained relatively steady, creating an uneasy calm across energy markets. Analysts warn that this apparent stability may mask the risk of a sudden and sharp price surge.

Crude benchmarks continue to hover around the $110 per barrel mark, with traders reluctant to take aggressive positions as uncertainty dominates sentiment. The unusual inversion of West Texas Intermediate (WTI) trading above Brent crude underscores the strain within the physical market and signals tightening supply conditions. While the Brent was $109 per barrel as of yesterday, WTI eased to $113.

The standoff stems from Washington’s ultimatum for Iran to reopen the Strait of Hormuz—a critical artery through which roughly one-fifth of global oil supply flows. Tehran’s continued restrictions on the waterway have already disrupted flows and heightened fears of a prolonged supply shock.

Markets have been on edge since the conflict escalated in late February, with investors caught between expectations of a last-minute diplomatic breakthrough and the risk of military confrontation. So far, negotiations have shown little progress, leaving traders in a wait-and-see mode.

While oil prices have climbed in recent weeks, the muted reaction in recent days reflects skepticism that immediate military action will materialize. Some analysts believe markets have grown accustomed to repeated deadlines and delayed escalations, dampening volatility in the short term.

However, the underlying risks remain significant. Any follow-through on U.S. threats could trigger retaliatory action from Iran, further disrupting Gulf energy infrastructure and sending crude prices sharply higher.

Beyond geopolitics, macroeconomic signals are compounding concerns. Rising fuel costs—alongside slowing economic activity and persistent inflation—are fuelling fears of a stagflationary environment. With U.S. gasoline and diesel prices climbing and inflation expected to accelerate, the global economy faces renewed pressure reminiscent of past energy shocks.

The International Monetary Fund is also expected to revise its growth outlook downward while raising inflation forecasts for 2026–2027, reinforcing concerns that the oil market turmoil could spill over into broader economic weakness.

For now, markets remain in a fragile holding pattern. But with the deadline looming and tensions unresolved, the calm in oil prices may prove temporary—leaving the door open for a sudden and potentially severe market reaction.

Meanwhile, an analyst, Dr. Marcel Okeke is optimistic that the US President would back down on his threat, saying any further escalation of the war is not good for the market.

“If he goes ahead to fulfill what he said, it’s going to cause more havoc. The only way things could become better is if he stops to do so. But if he stops to do so, it means that the war continues. And nobody knows the dimensions the war could take, because Iran already is so agitated that even other countries within the gulf region have become their enemies. So it means it becomes a war without an end. So what that means is that the price of crude oil would still be high but I don’t see Trump doing what he has threatened to do,” he said.