Brent crude climbed above $70 per barrel on Thursday for the first time since September as traders responded to President Donald Trump’s escalating military threats against Iran, raising concerns about potential disruptions to oil flows from the Gulf region.
Oil prices have gained nearly 3 percent this week as Trump has employed increasingly hostile rhetoric following Iran’s brutal crackdown on protesters. The USS Abraham Lincoln arrived in Middle Eastern waters earlier this week as part of what Trump described as a “beautiful armada” targeting Iran. While the president’s specific intentions remain unclear, he posted on social media Wednesday that the naval force would use “speed and violence, if necessary.”
Market Anxiety Grows Over Potential Supply Disruption
“There’s growing anxiety in oil markets that there could be an acute event and even if there isn’t, having this US military presence in the Middle East in that region creates a lingering impression,” said Edward Bell, head of research at Abu Dhabi-based EmiratesNBD, according to The Financial Times.
Any military action against Iran could interrupt oil flows not just from the country itself but potentially from the broader Gulf region, which remains vital for global crude supplies. However, Bell noted that traders will focus primarily on whether physical cargo is actually affected. “Geopolitics burns hot but briefly in oil markets. Unless cargo is affected the price impact will fade rapidly,” he added.
The oil rally has also been amplified by a sharp sell-off in the US dollar. A weaker dollar makes purchasing oil cheaper for investors holding foreign currencies, providing additional support for crude prices independent of supply concerns.
Will Geopolitical Risk Premiums Return to Energy Markets?
The Brent crude surge past $70 signals that geopolitical risk premiums are making a comeback after being largely absent from oil markets during recent months. For years, traders have become desensitized to Middle East tensions that rarely materialize into actual supply disruptions, but Trump’s unpredictable approach and willingness to use military force creates genuine uncertainty.
This matters beyond traditional energy markets. Rising oil prices typically feed into broader inflation pressures, which could complicate the Federal Reserve’s monetary policy decisions and affect risk asset valuations including cryptocurrencies. Higher energy costs reduce consumer spending power and can trigger economic slowdowns that historically correlate with crypto market downturns.
However, there’s an argument that sustained geopolitical instability and currency volatility could eventually benefit Bitcoin as a non-sovereign store of value. If military conflict escalates and the dollar continues weakening while oil spikes, we might see investors seeking alternatives outside traditional financial systems. The challenge is that in the immediate crisis phase, crypto typically sells off alongside other risk assets before potentially benefiting from longer-term currency debasement concerns.
The key question is whether Trump will actually follow through with military action or if this represents negotiating theater. Oil markets are betting on at least some probability of real conflict, but as Bell noted, unless physical supply is disrupted, the price impact will likely prove temporary. For crypto investors, monitoring oil prices provides an early warning system for inflation pressures and geopolitical instability that could shape monetary policy and risk appetite in the months ahead.
