Oil Prices Surge on Trump's Iran Strike Warning, WTI Hits $98 Amid Geopolitical Fears

Oil prices surged on Friday, with West Texas Intermediate (WTI) jumping 4.7% to settle at $98.12 per barrel—the largest daily gain in over a week—while Brent crude climbed 4.3% to $103.45. The move followed President Trump’s warning that diplomacy may soon exhaust its utility in curbing Iran’s nuclear ambitions, raising the prospect of U.S. military intervention. Markets interpreted the statement as a sign that escalation in U.S.-Iran relations is increasingly probable. The spike in oil futures underscores the sensitivity of global energy markets to Middle East tensions. Given Iran’s proximity to the Strait of Hormuz—a chokepoint through which roughly 20% of global oil shipments pass—any disruption in the region can trigger rapid price adjustments. Analysts noted that implied volatility in oil options has risen sharply, indicating heightened risk premium pricing. The OIL ticker, a broad energy sector index, rose 3.8% on the day, reflecting broader investor caution. Defense and transportation sectors also saw notable movements. Shares in major oil producers such as ExxonMobil (XOM) and Chevron (CVX) gained 2.9% and 2.6%, respectively, as investors priced in higher energy revenues. Meanwhile, defense contractors including Lockheed Martin (LMT) and Raytheon Technologies (RTX) saw modest gains, reflecting expectations of increased military spending if tensions escalate. The U.S. dollar weakened slightly against the euro and yen, as safe-haven flows favored commodities over cash. Traders are now monitoring diplomatic channels and naval activity near the Persian Gulf. A U.S. strike on Iran would likely trigger a supply shock, with potential disruptions to global shipping and refinery operations. The current market pricing implies a roughly 35% probability of a strike within the next 90 days, according to option chain analysis.