Oil prices drop as Trump backs away from his threat of strikes on Iran

MW Oil prices drop as Trump backs away from his threat of strikes on Iran

By Myra P. Saefong and Victor Reklaitis

The president had threatened strikes on Iran Thursday night and said the U.S. would take Kharg Island, the Mideast country's oil-export hub

President Donald Trump had threatened in a social-media post on Thursday that the U.S. would take Iran's Kharg Island and other oil-infrastructure points and assume control of Iran's oil and gas markets, but then he wrote a conciliatory post.

Oil prices dropped Thursday after President Donald Trump said he was canceling planned fresh strikes on Iran, pulling back from his threat earlier in the day.

"Based on the fact that discussions with the Islamic Republic of Iran have been brought to the highest level of Iranian leadership and approved, I have, as President of the United States of America, cancelled the scheduled strikes and bombings against Iran this evening," Trump said in a social-media post.

Trump said that "final points" for a deal with Iran had been agreed to by the U.S., Iran and other nations but didn't elaborate. He said more would be announced shortly.

Earlier Thursday, oil prices had gained after the president threatened further strikes on Iran and said the U.S. would take control of the country's oil and gas markets as well Kharg Island, its oil-export hub.

While Trump had said the U.S. would assume total control of Iran's oil and gas markets, much like it did with Venezuela, analysts were calling that outcome likely.

"Trump wants the threat, not the action. The goal is Iran capitulation, not a supply shock that hurts U.S. consumers before midterms," Terry Haines, a veteran analyst and founder of Pangaea Policy, said in a note Thursday morning. "Trump is raising the stakes to end the conflict faster, not extend it."

On Truth Social early Thursday, Trump said the U.S. will be "hitting Iran ... VERY HARD TONIGHT" and that in the not-too-distant future, it would be taking Kharg Island, which one expert has referred to as Iran's economic heartbeat, and other oil-infrastructure points.

Following his post, prices for global benchmark Brent crude (BRN00) climbed to around $94 a barrel, close to the overnight high above $95 on ICE Futures Europe, FactSet data show. The August contract (BRNQ26) has since declined, with prices at last check at $89.58, down 3.8%. U.S. benchmark West Texas Intermediate crude for July delivery (CLN26) (CL.1) was down 3.1% at $87.25 on the New York Mercantile Exchange.

At the moment, the oil market is performing "as if it thinks a deal will get done sooner rather than later," said Robert Yawger, director of energy futures at Mizuho Securities USA.

Crude-oil prices have been declining since the middle of May, and Brent open interest was at its lowest level since March 2025 on Wednesday, he said.

But Yawger said he does not believe a peace deal will get done as long as the Islamic Revolutionary Guard Corps and Ayatollah Mojtaba Khamenei are effectively in charge of the negotiations. Oil prices will likely "start to tick higher in coming days as storage continues to drain out," with daily production still down by between 11 million and 14 million barrels in the Persian Gulf region.

The U.S. and Iran "continue to seek to avoid a return to all-out war and are preserving space for continued negotiations," Evercore ISI analysts led by Sarah Bianchi said in a note Thursday.

"While Trump has repeatedly stepped back from similar threats over the past two months, the risk of follow-through cannot be fully dismissed. That said, we continue to believe he strongly prefers a negotiated outcome that would allow him to claim progress and shift attention to other priorities," the Evercore team wrote.

Another analyst criticized Trump for likening Iran to Venezuela, which wasn't as strong as Iran in many areas before the U.S. operation against the South American country in January.

Behnam Ben Taleblu, senior director of the Iran program at the Foundation for Defense of Democracies, a nonpartisan research institute, said in a social-media post that "the reference made to Venezuela is troubling. Almost 4 months in, it should be abundantly apparent that Iran is not Venezuela, neither in terms of state structure, nor society, and most acutely, not in terms of military capability."

'Illogical insanity'

Still, given the action in oil prices, which have somewhat stabilized following an initial spike higher, Stephen Innes, managing partner at SPI Asset Management, told MarketWatch the oil market has been quite resilient despite its "illogical insanity right now."

The market has been "sliced and diced from every oil-bullish corner of the traditional trading landscape, and the conclusion I keep coming back to is that the physical system has proved far more durable than assumptions," Innes said when asked about his reaction to Trump's early Thursday social-media post.

Reserve buffers for oil have been "more resilient, tanker traffic has found 'goat paths' along the Omani coastline, and post-COVID demand behavior has changed more than the market initially understood," he said.

At the same time, he pointed out that at around $90 a barrel, Brent prices show that traders are worried but haven't priced in a "full physical rupture" in the Strait of Hormuz.

If Hormuz were genuinely shut, crude would not be "politely" trading below $100 a barrel, he said. "It would be trying to kick the door off the hinges."

Secret mission to support oil

Trump has said that part of the reason oil prices aren't even higher is because the U.S. has been helping oil tankers and other ships move through the Strait of Hormuz.

Trump told reporters Wednesday that the U.S. recently secretly brought out 22 ships late at night "with no lights." The president added that he's "just announcing today for the first time" that "millions of barrels of oil has come out, and that's why it's at $85, $90 a barrel, instead of $250."

In a social-media post, he said that the U.S. secret mission to support oil tankers and other commercial ships through the strait has resulted in "more than 100 MILLION Barrels of Oil making its way through the Strait, and into the Open Market."

The 100-million-barrel figure is broadly consistent with observed crude flows from non-Iranian Mideast Gulf producers, although the underlying trade picture is more complex than conventional vessel tracking would imply, according to an analysis from Kpler provided by its U.S. lead analyst, Matt Smith.

To assess those flows, Kpler combined two terminal views: Mideast Gulf crude and condensate transits via the Strait of Hormuz, excluding Iran, and Gulf of Oman crude exports of unknown origin. Together, these capture both direct Hormuz movements and Gulf of Oman-linked flows that may involve "dark" transits, shuttle tanker movements or offshore transfers.

Since the beginning of May, those two data sets show approximately 96 million barrels of confirmed non-Iranian crude exiting the Persian Gulf through either direct Hormuz transits or Gulf of Oman-linked export networks, Kpler data showed.

Including two very large crude carrier cargoes currently loading in the Gulf of Oman, total observed flows are at least 100 million barrels, "aligning with Trump's statement," according to Kpler.

Claudia Assis contributed.

-Myra P. Saefong -Victor Reklaitis

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June 11, 2026 14:34 ET (18:34 GMT)

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