President Trump said he believes the war is “very complete, pretty much,” and that the US is “very far” ahead of his estimated timeline. The remarks, made Monday afternoon to CBS News, sent oil prices tumbling and triggered a sharp swing into the green across all three major US indexes.
But statements from Trump alone are unlikely to solve the severe physical bottlenecks weighing on the global energy market, analysts and energy experts told Yahoo Finance — especially as the critical Strait of Hormuz, which accounts for 20% of global seaborne oil flows, remains closed to normal through-traffic.
“The market has been holding out for a so-called ‘TACO’ trade,” Capital analyst Kyle Rodda said, but “ultimately, the proof will be in the pudding as to whether the war does de-escalate.”
He added, “The critical issue will be substantial evidence that oil is flowing through the Strait of Hormuz, Gulf nations are returning output to normal, and critical energy infrastructure is safe, and there’s minimal risk of being attacked again.”
On Sunday night, oil prices on both international benchmark Brent (BZ=F) and US benchmark West Texas Intermediate (CL=F) crude surged up to $119 per barrel before beginning to pare gains. After the president’s comments to CBS were published on Monday, prices quickly reversed.
As of 1:15 p.m. ET, Brent and WTI crude were trading around $81.40 and $79.90, respectively, down more than 30% from their highs.
“What President Trump’s done is he’s been able to play for time,” Marex CSC commodities unit energy analyst Sasha Foss said.
The president is also likely to be highly sensitive to gasoline prices as the administration approaches midterm elections, analysts told Yahoo Finance. US gasoline pump prices were averaging $3.539 per gallon on Tuesday, up from $2.921 one month ago, according to data from AAA.
But the reality is more complicated than a US-dictated end to the conflict. Even if tensions were to ease— and even if the Strait of Hormuz reopened tomorrow — the global oil system cannot restart overnight, especially after the damage to energy infrastructure throughout the Middle East in the first 10 days of the conflict, analysts said.
Tankers moving through the strait require security guarantees, insurance coverage, and functioning ports across the Gulf. Shut-ins — temporary cuts in production — at wellheads and halted operations at refineries take anywhere from days to weeks to restart.
On Tuesday morning, the United Arab Emirates announced that the government was taking its Ruwais refinery, which can process around 900,000 bpd of oil, offline as a precaution after airstrikes, adding to a litany of closures across the Middle East. Earlier in the week, Bahrain shut down its Bapco Energies refinery, the country’s only such facility, and Qatar’s QatarEnergy has declared a force majeure on deliveries from the Ras Laffan liquefied natural gas (LNG) export terminal.
At the wellhead, shut-ins throughout Saudi Arabia, Iraq, Kuwait, and the UAE now total roughly 6.7 million bpd of lost production, equivalent to around 6% of global supply. Adding to hesitation for companies considering transit through the Strait of Hormuz, Iranian state media reported on Tuesday that an oil tanker had sustained an explosion near the UAE’s Abu Dhabi.
“The further this conflict goes on, the more that there are shut-in productions, which aren’t like a light switch,” Foss told Yahoo Finance. “If you wind them down or [infrastructure such as refineries] takes damage, it takes weeks, if not months, to ramp it back up to previous levels.”
Saudi Aramco (2223.SR) CEO Amin Nasser warned investors Tuesday morning of “catastrophic consequences for the world’s oil markets the longer the disruption goes on.”
Additionally, the White House has sent mixed messages about the state of Middle East tensions. At a morning press conference, Secretary of Defense Pete Hegseth said Tuesday would be the “most intense day of strikes yet.” He added that the US will “not relent” until its military objectives are achieved and that the conflict will “happen on the US’s timeline.”
In comments to House Republicans at an event in Florida on Monday evening, Trump said the US “[hasn’t] won enough” and that he “will not allow a terrorist regime to hold the world hostage and attempt to stop the globe’s oil supply.”
The conflict has also reached a point where it is no longer in the president’s hands, analysts said. Instead, Iran now retains control over when it will decide to guarantee safe passage through the Strait of Hormuz or continue its attacks.
“Everybody seems to think this war is over/ending, except for Iran,” Gregory Brew, senior oil and Iran analyst at Eurasia Group, wrote in an X post. “You can all buy the taco, but if Iran doesn’t, then war can’t end.”
