Persistent geopolitical conflicts in the Middle East and escalating U.S.-Iran tensions have stalled peace negotiations between the two nations. The rapid rise in regional risks has driven international oil prices higher for five consecutive trading sessions, while the U.S. dollar has also strengthened, reaching a 10-day peak. With the conflict showing no signs of near-term resolution, global oil prices surged once again on Thursday. WTI crude rose to approximately $97 per barrel, while Brent crude briefly surpassed $107 per barrel during the session, closing firmly above the $105 mark. For the week, prices have gained roughly 16%. According to two U.S. officials familiar with the matter, recent social media posts by the former president on Truth Social, along with his decision to maintain a maritime blockade on Iranian ports, have negatively impacted negotiations being mediated by countries such as Pakistan. Since the outbreak of hostilities in late February, global energy markets have continued to face disruptions. Shipping through the Strait of Hormuz, a critical global energy chokepoint, has nearly halted, leading to a sharp reduction in exports from major oil and gas producers in the Persian Gulf. Concerns over stalled peace talks have intensified, with both sides exchanging increasingly heated rhetoric and military threats, adding a geopolitical risk premium to oil prices. Dennis Kissler, Senior Vice President at BOK Financial Securities Inc., noted, "Tensions are escalating further—markets are anticipating a more intense and prolonged standoff." On Thursday, the former president stated on social media that he had ordered the U.S. Navy to "take out" vessels laying mines in the Strait of Hormuz, prompting an immediate rise in international oil prices. Concurrently, U.S. forces boarded a supertanker carrying Iranian oil in the Indian Ocean, as the U.S. Navy strengthened its blockade of Iranian maritime routes. Efforts to restart U.S.-Iran negotiations have encountered obstacles, with both sides deadlocked on key issues such as Iran's nuclear capabilities and Israeli strikes in Lebanon. The former president announced via social media that a ceasefire agreement in Lebanon would be extended by three weeks. However, this localized de-escalation has failed to ease the broader tensions, and market expectations for a near-term resolution have diminished rapidly. As risk-off sentiment grows, the U.S. dollar continues to strengthen. Amid soaring energy markets, foreign exchange markets have also experienced volatility. Driven by heightened Middle East tensions and rising risk aversion, the U.S. dollar strengthened for a third consecutive day. On Thursday, the Bloomberg Dollar Spot Index rose by as much as 0.3%, reaching its highest level since April 13, before paring gains slightly. All G10 currencies weakened against the dollar, with the New Zealand dollar leading the declines. The euro fell 0.3% against the dollar to $1.1669, reflecting the region's heavy reliance on energy supplies from the Middle East. Andrew Hazlett, a foreign exchange trader at Monex Inc., commented, "Rising oil prices are driving dollar strength. Traders believe that the escalating tensions over the past few days indicate that an end to the conflict is no longer imminent." Bloomberg strategist Brendan Fagan added, "If rising energy costs begin to more significantly boost inflation expectations, tighten financial conditions, and dampen global growth, the relative resilience of the U.S. economy should once again support the dollar." Wells Fargo strategist Aroop Chatterjee noted, "U.S. blockade measures, combined with Iranian actions in the Strait of Hormuz, have significantly raised the tail risk of further escalation. Existing contradictions remain unresolved, and energy supply disruptions are likely to worsen over time. Market complacency is being tested."
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