By Kate Jones — White House Bureau Chief

Energy markets have behaved less like traditional commodity markets and more like instruments of geopolitical interpretation in recent days. Within roughly thirty-six hours, prices surged amid fears that the war could disrupt shipping through the Strait of Hormuz long term, before retreating as traders absorbed signals from Washington suggesting the conflict may prove shorter than initially feared. Brent crude was trading around $90–$91 per barrel as of midday EDT Wednesday, after briefly approaching $119 earlier this week before falling sharply as markets reacted to shifting signals about the duration and scope of the war with Iran.

The rapid swings reflect the reality that energy markets during wartime do not simply measure physical supply. They interpret political, military, and news signals to estimate what supply may look like weeks or months ahead.

In that sense, oil markets become a kind of strategic crystal ball, reacting less to the present flow of barrels than to expectations about the future course of the conflict. Even while there is more energy supply than demand, disruption at a strategic chokepoint makes the real flow of energy difficult for markets to price.

Governments Move to Stabilize Markets

Governments are also beginning to move emergency supply into the market.

Officials from major industrial economies have been discussing coordinated releases from strategic petroleum reserves to stabilize prices as the conflict threatens shipping in the Persian Gulf. The effort is being coordinated by the International Energy Agency, which organizes emergency stock releases among advanced industrial economies. This could be up to 400 million barrels total from IEA members.

Japan moved first, announcing plans to release roughly 80 million barrels from government and privately held emergency reserves in an effort to cushion markets from potential supply disruptions. Traders say the announcement itself has already been partially priced into markets.

Strategic reserve releases historically dampen price spikes even before the oil physically reaches the market because traders begin factoring future supply into pricing models. Reserve releases buy time, soften volatility, and increase supply temporarily. They cannot replace the roughly one-fifth of global oil supply that normally passes through the Strait of Hormuz, which remains the central risk driving market swings.

Markets Watching Washington

Speaking at the House Republican conference in Doral, Florida, President Donald Trump suggested the campaign against Iran might conclude relatively quickly, saying “We will ensure the routes.” The President later warned that any attempt by Iran to halt oil flows through the Strait of Hormuz would trigger a far stronger response. “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.” This was reiterated by General Caine when asked at a press conference Tuesday morning, when it was safe to do so, the U.S. would ensure safe passage. Development Finance Corporation CEO Ben Black, said, the “DFC is here to provide support and stability in order to ensure there are minimal disruptions to operations and markets,” and “DFC’s Political Risk Insurance and Guaranty products will help ensure commerce, capital, and energy can operate at capacity during the ongoing conflict.”

Battlefield Signals and the Oil Market

Defense officials say U.S. forces have struck more than 5,000 targets inside Iran, focusing primarily on missile systems, defense industrial manufacture, drone infrastructure, and nuclear-related facilities.The nuclear dimension of the conflict also remains central to Washington’s strategic rationale. During negotiations before the escalation, U.S. envoy Steve Witkoff said Iranian negotiators acknowledged that Iran possessed enough highly enriched uranium that, if further enriched to weapons-grade levels, could theoretically produce material for roughly eleven nuclear weapons.

Despite the numbers, and official statements daily that today is the biggest day, there should be caution that the effectiveness of the strikes will take time to fully evaluate. Analysts at the National Geospatial-Intelligence Agency typically require about a week to produce a comprehensive battle-damage assessment, meaning early claims about the impact of strikes remain preliminary. It could take a week from the final hit to know with certainty that shipping can be secured.

Mines, Missiles and Maritime Pressure

New battlefield analysis suggests Iran has explored mining the Strait of Hormuz as a way to disrupt maritime traffic. Yet mining the strait would also threaten Iran’s own exports.

U.S. Central Command reported that American forces destroyed 16 Iranian vessels capable of laying naval mines near the Strait of Hormuz, part of a broader Iranian effort to threaten maritime traffic and impose economic costs on Gulf states and the United States. Iran has historically used naval mines to threaten shipping lanes in the Persian Gulf, and even limited mining could halt commercial traffic because insurers and shipping companies typically suspend transit until mines are cleared. Iran had somewhere between 3000-5000 sea mines stockpiled, predominantly Russian and Chinese made.

Commercial maritime tracking indicates that traffic from vessels associated with Iran’s so-called “ghost fleet” has already dropped sharply in recent days.

Kharg Island and the Oil Lever

One strategic option discussed in Washington involves Iran’s primary export terminal at Kharg Island. The island handles the majority of Iran’s oil exports and represents the central node of Tehran’s energy revenue. President Trump has reportedly suggested the possibility of deploying U.S. forces. Troops could try to neutralize or seize the facility in an operation that could effectively strangle Iran’s oil exports without attempting to occupy Iranian territory.

Such a move would represent a major escalation, but it illustrates how maritime dominance alone can exert enormous economic pressure on an oil-exporting state. Even without physically closing the Strait of Hormuz, controlling the skies and having maritime control can impose similar effects, making such a plan less likely.

The challenge is that Iranian missile batteries, drones, and naval patrol craft positioned along the coast still threaten vessels passing through the narrow corridor. Until every drone is neutralized, insurers and shippers will remain shy of using the waterway.

Kurdish Regions and Internal Pressure

Western Iran may also become an arena for internal instability as the conflict continues. Several provinces along Iran’s border with Iraq including Kurdistan, Kermanshah, and Ilam have seen strikes targeting internal security forces and police facilities.

Reports indicate the Trump administration has encouraged Kurdish leaders in the region to challenge Tehran’s authority, raising the possibility that Kurdish groups could open a second internal pressure point against the Iranian government.

Analysts say Kurdish leaders seem prepared to act, but require external encouragement matched by sustained international support, while a Kurdish uprising could weaken Tehran’s internal control but would also carry risks of regional fragmentation.

Regional Escalation

The conflict widened as Iran and Hezbollah increased attacks on Israel. Israeli officials say that Iranian and Hezbollah forces launched coordinated missile barrages using cluster-munition warheads, weapons that disperse dozens of smaller bomblets over a wide area after a missile detonates at altitude. Military assessments indicate that a significant share of Iranian missiles fired during the conflict have carried cluster submunitions, complicating air-defense interception and increasing the risk to civilians. The coordinated use of such weapons widened the conflict into a broader regional confrontation involving Tehran’s proxy network.

Diplomacy and Intelligence

The war has also raised questions about Russian involvement, but Russian officials have denied sharing intelligence with Iran during the conflict. Asked whether Washington could rely on those assurances, U.S. envoy Steve Witkoff responded cautiously. “I’m not an intelligence officer, so I can’t tell you,” Witkoff said. “Let’s hope that they’re not sharing.”

Markets Waiting for the Next Signal

For traders, the decisive variable remains time. If the conflict proves short and shipping continues to move through the Strait of Hormuz, the geopolitical premium currently embedded in oil prices could fade quickly. The markets are the factor most carefully managed by the Trump administration, one can be sure it is closely watched to ensure stability, consumer confidence in the administration and at the pump, while economic statecraft combines with warfare.

The administration has a timeline on trust, if the war expands into a prolonged struggle over maritime control, insurance markets, and energy infrastructure, oil traders will begin pricing in a reality. This could be a much deeper disruption to global supply. With nearly one-fifth of the world’s oil moving through a corridor only a few miles wide, even the perception of danger in the Strait of Hormuz has proven to move markets and shape the global economy.

In modern energy markets, strategy and price now move together: every missile launch, naval maneuver, or diplomatic signal becomes another data point in the world’s attempt to predict the future. In modern warfare, the balance of power is an act of economic statecraft as much as surgical strikes.