Trump’s oil‑price gambit keeps Strait of Hormuz closed

Brent crude slid to $97.90 a barrel on Monday, a 5.5% drop, after President Donald Trump signaled that talks with Iran could produce a “great deal for all or no deal at all” [1]. The price dip came despite the Strait of Hormuz—through which roughly 20% of global oil and LNG flows—remaining effectively sealed since the conflict began on 28 February.

Trump’s optimism was echoed by Secretary of State Marco Rubio, who described the negotiations as “a pretty solid thing on the table” and suggested an agreement might be reached that week [1]. Yet Iranian officials warned that no final accord was imminent, and the strait stayed closed, leaving shipping lines wary of mines and other hazards [1]. The market’s reaction was muted: while the price fell sharply, it stayed well above pre‑war levels of around $70 per barrel, and analysts expect oil markets to stay tight through 2027 as damaged facilities and depleted stockpiles take time to recover [1].

Analysts attribute the price stability to a “TACO equilibrium” – the notion that traders expect Trump to back down once oil prices climb high enough, prompting him to gesture at peace deals to calm markets [2]. This feedback loop has kept oil prices near $94‑$95 a barrel, even as the strait remains shut and the war drags on. Rory Johnston of Commodity Context notes that each time prices rise, Trump’s announcements cause a dip, but the war does not end, reinforcing the pattern [2]. The strategy, however, is losing steam; traders are beginning to recognize the repeated “peace‑deal‑price‑drop” cycle, and dwindling strategic reserves could soon force a supply crunch that no political maneuver can offset [2].

If the market’s belief in Trump’s eventual retreat weakens, oil prices could surge, pressuring the administration to act. Until then, the Strait of Hormuz stays closed, shipping lines stay cautious, and the global oil market remains in a delicate balance dictated as much by political theater as by physical supply.