Brent crude pushed back toward $94 a barrel this week, reversing a two-week dip that came after US officials talked up the prospect of a deal with Tehran. There is no deal. The June MOU lasted three weeks before Washington revoked the oil export waivers on July 7 when Iran resumed attacks on commercial vessels.
The setup right now is strange. Shipping through the Strait is running at roughly 35 to 50 percent of its pre-war level. About 20 million barrels per day used to pass through Hormuz before February. The US military says it has escorted enough tankers to move around 7 million barrels per day over the past few weeks, though independent estimates from Kpler put the number closer to 4 to 5 million. The gap is real and it isn't going away on a short timeline.
Yet equity markets are still near all-time highs. US small business optimism just hit its best reading since August 2025. The bond market is applying more pressure than stocks are, with the 30-year Treasury yield pushing through 5.27%, but even that move has been orderly.
What the market seems to believe
The implicit bet is that this stays contained. Iran keeps harassing shipping but doesn't fully close the Strait. The US keeps escorting tankers. Oil stays elevated but not catastrophically so. Eventually there's a deal.
That could be right. But Treasury Secretary Bessent spent last week threatening sanctions that have "never been seen in the history of economic isolation on a country." Iran's armed forces chief responded by warning of "devastating responses." Neither side is behaving like a party that thinks it's close to an exit.
The more uncomfortable read is that both Washington and Tehran have domestic reasons to drag this out. Trump gets a foreign policy fight. Iran's hardliners get a reason to consolidate. And in the meantime refineries are running short of crude, US gas prices are up nearly a dollar from a year ago, and the fuel supply crisis is starting to look structural rather than temporary.
At $94 a barrel the market is priced for managed uncertainty. If the next round of US sanctions actually bites as hard as Bessent is suggesting, that assumption is going to get tested.