Crude oil roared back to life on Wednesday. West Texas Intermediate futures — as tracked by the United States Oil Fund (NYSE:USO) — jumped nearly 6% to around $75 a barrel, and Brent climbed past $78, after President Donald Trump said the interim ceasefire with Iran is effectively over.
“For me, I think it’s over,” Trump told reporters on the sidelines of the NATO summit in Ankara, adding that dealing with Tehran had become a waste of time.
He said negotiators could keep talking, but traders read the comments as a clear escalation and bid crude higher within minutes.
Why Oil Prices Moved
The geopolitical relief that had dragged crude back toward pre-war levels ended almost overnight.
The latest flare-up followed reported attacks on three commercial vessels in the Strait of Hormuz, retaliatory U.S. strikes on Iran, and an Iranian response against American bases in the Gulf.
Washington also moved to revoke Iran’s ability to sell crude on the global market.
About a fifth of the world’s seaborne oil passes through Hormuz, so any threat to the chokepoint tends to travel straight into the price.
“We see this as a classic play right out of the pages of Trump’s Art of the Deal,” Matthew Ryan, head of market strategy at FX firm Ebury said. “We do expect the heightened uncertainty to be reflected in an increase in the geopolitical risk premium.”
What Prediction Markets Are Pricing In
On Polymarket, the probability that WTI touches $80 at some point in July jumped to 50%. Further up the ladder, the odds thin out fast: $85 sits at 26%, $90 at 13%, and $95 at just 8%.
In short, bettors see a coin-flip shot at $80 but treat a return to the triple digits of early spring as a long shot.
There’s a counterweight worth flagging. OPEC+ has been raising output quotas, and Saudi Arabia recently trimmed its official selling prices to Asia.
More barrels on the water can blunt a geopolitical premium, part of why the market isn’t pricing $100 oil despite the headlines.
The Fed Angle
Higher energy prices complicate the inflation picture, and that is already showing up in rate expectations. Polymarket now assigns a 21% chance of a 25-basis-point hike at the Fed’s July meeting, up from around 15% a day earlier, though “no change” remains the base case at roughly 78%.
Zoom out, and the probability of at least one Fed rate hike during 2026 has climbed to 56%, up from below 50% before the Hormuz escalation.
“The jump in oil prices has spiked renewed inflation fears. This has fed through into higher US Treasury yields which should support the dollar to some extent,” said David Morrison, analyst at Trade Nation.
Earlier this week, Ryan Sweet, chief economist at Oxford Economics, warned that the durability of the ceasefire would determine “whether the global economy gets an energy-driven disinflation tailwind or absorbs a second oil shock.”
For Fed Chair Kevin Warsh, who has signaled his resolve to fight sticky inflation, a fresh oil spike is exactly the kind of variable he does not want.
