Oil prices swung sharply on Tuesday after a U.S. Energy Secretary's claim of a Navy escort through the Strait of Hormuz was corrected by the White House, amid ongoing disruptions from the U.S.-led operation against Iran. Brent crude fell to around $81 per barrel before recovering to close near $91. The incident highlights efforts to stabilize oil flows through the strait, which carries 20% of the world's oil.
Oil prices have been volatile due to the ongoing U.S. military operation in Iran, known as Operation Epic Fury, which began on February 28 and has disrupted traffic through the Strait of Hormuz. The strait, located between Iran and the United Arab Emirates, serves as the primary passage for tankers leaving the Persian Gulf. Oil flow nearly halted last week but increased to 20% of normal levels on Monday, according to Goldman Sachs analysis, with some tankers disabling transponders to navigate.
On Monday, Brent crude reached nearly $120 per barrel, its highest in four years, before dropping below $90 after President Donald Trump stated the operation was very far ahead of schedule in a CBS News interview. Trump warned Iran, saying, "If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far." He added, "Additionally, we will take out easily destroyable targets that will make it virtually impossible for Iran to ever be built back, as a Nation, again — Death, Fire, and Fury will reign upon them — But I hope, and pray, that it does not happen!"
Tuesday brought further swings. Secretary of Energy Chris Wright posted on X that the U.S. Navy had successfully escorted an oil tanker through the strait, causing Brent crude to plunge to around $81 per barrel, per MarketWatch. White House Press Secretary Karoline Leavitt corrected the claim during her afternoon briefing: "I can confirm that the U.S. Navy has not escorted a tanker or a vessel at this time, though, of course, that’s an option that the president has said he will absolutely utilize if and when necessary at the appropriate time." Prices then rose, closing around $91 per barrel.
Leavitt reassured Americans that the price increase is temporary and the operation would lead to lower gas prices in the long term, potentially dropping rapidly once objectives are met. U.S. forces have struck over 5,000 targets in Iran since the operation began, with Tuesday marking the most intense day of strikes, according to War Secretary Pete Hegsesth and Adm. Dan Caine, chairman of the Joint Chiefs of Staff.
The Trump administration has pursued other measures to ease pressures, including directing the U.S. International Development Finance Corporation to provide political risk insurance for Gulf tankers, where premiums have risen up to 37.5% and some policies canceled. The Treasury Department, led by Secretary Scott Bessent, issued a temporary 30-day lift on oil sanctions Friday, allowing India to purchase Russian oil. Senate Democrats criticized this, stating, "Now is not the time to clear the way for sales for Russian oil majors and Russian-owned and shadow fleet vessels." Bessent countered that the relief is narrow and offers no substantial benefit to Russia.
Iran's Ali Larijani responded to Trump's warning: "The Ashura-loving nation of Iran does not fear your paper threats. Even those greater than you could not eliminate the Iranian nation. Watch out for yourself—lest you be eliminated!" U.S. intelligence indicates Iran may prepare to drop mines in the strait, per CBS News, which experts warn could push prices to $150 per barrel if disruptions last over two weeks, according to the Associated Press. Saudi Arabia's state oil company cautioned of catastrophic consequences for global markets if the lane does not reopen soon.
