Oil prices swung wildly during Tuesday’s trading session as investors took in more updates from the Trump administration on the Iran war.
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Oil prices saw a sudden, sharp decline on Tuesday afternoon after US Energy Secretary Chris Wright posted on X that the US Navy escorted an oil tanker through the Strait of Hormuz.
Wright deleted the post roughly 20 minutes after publishing it, and the White House later confirmed that the Navy had not escorted a tanker through the Strait. Brent plunged toward $80 before spiking back to around $88 after the White House contradicted Wright’s claim. The international oil benchmark was still down 12% close to 3 p.m. ET.
The energy market is seeing the most intense volatility in more than half a decade as investors try to digest the signals coming from President Donald Trump and his administration about the Iran war, but market pros say further swings are likely.
“The market is in highly speculative mode thanks to the absence of any certainty about what the next few days, let alone weeks, will look like,” Russ Mould, investment director at AJ Bell, said in an email on Tuesday morning.
The sharp reversal in oil prices this week came after comments from Trump reassured investors that the war with Iran could be over soon.
In an interview with CBS News on Monday afternoon, Trump said the war is “very complete, pretty much.” However, he appeared to strike a different tone in remarks to House Republicans in Miami and during a press conference later that day, adding to the mixed messages for the market to decode.
This week’s price drop followed a dramatic surge on Sunday night, when oil futures spiked to nearly $120 a barrel amid escalating fears of supply disruptions at the Strait of Hormuz — a critical chokepoint for global crude shipments.
“The market is now aware of President Trump’s pain threshold on oil prices,” wrote commodities strategists at ING on Tuesday.
The mood in the stock market remained cautious. US stocks rose sharply as oil plunged, but gave back much of the gain as traders digested the updates co
Here’s where major indexes stood around 2:45 p.m. ET:
S&P 500: 6,798.28, up 0.03%
Dow Jones Industrial Average: 47,833.69, up 0.2% (+92 points)
Nasdaq Composite: 22,742.687, up 0.2%
Commentators urged investors to exercise further caution as the Iran war timeline remains in flux. There’s little indication, even after Trump’s comments on Monday, that the conflict is winding down.
“Markets interpret political messaging almost instantly, often adjusting prices well before the underlying situation has materially changed,” said Nigel Green, the CEO of deVere Group, a financial advisory firm.
The CBOE Crude Oil Volatility index, which tracks swings in oil prices, passed above 100 over the weekend, reaching its highest level since the beginning of the COVID pandemic. Oil volatility has jumped more than 230% since January.
“The levels of volatility in energy markets have been extreme even by their own turbulent standards,” AJ Bell’s Mould wrote.
“The pressure valve has clearly been released for now. However, volatility across energy markets remains exceptionally elevated,” wrote Chris Weston, the head of research at Pepperstone.
Investors can expect significant intraday volatility to continue, including “moves that may not always make immediate sense,” Weston added in his note.
“The geopolitical backdrop remains fluid, and traders should expect volatility to remain a defining feature of the trading environment in the days ahead,” he wrote.
Still, the outlook remains highly uncertain. Green said much will depend on the influence and decision-making approach of Iran’s new Supreme Leader, Mojtaba Khamenei — another layer of unpredictability to the geopolitical backdrop.
ING’s strategists echo the view that Trump’s words can only go so far.
“Ultimately, the market will need to see a resumption of oil flows through the Strait of Hormuz to sustain a move lower in oil prices. Failing that, we are unlikely to have seen the highs yet,” they wrote.
