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The market is at a razor’s edge. While ceasefire hopes offered a brief reprieve, the clock is ticking toward Trump’s 8 p.m. ET Iran deadline. With a “civilization-ending” ultimatum on the table and the Strait of Hormuz at stake, tonight could redefine the global energy tape [tap to join us for Profit Panel]
Flip on the news and it’s the same story everywhere you look. The war, the Middle East and crude oil climbing higher are dominating attention right now.
When I checked Monday morning, crude was sitting at $114, though it pulled back to $112 during the session. Either way, that’s a significant move, and it’s not driven by a traditional supply-and-demand chart pattern.
The primary driver behind crude oil right now is constrained supply out of the Middle East. When oil can’t move freely out of that region, prices respond quickly.
What Happens in the Now
Here’s where it gets interesting: The next few hours could determine whether crude moves lower or continues climbing. There’s a negotiation deadline approaching, and depending on how that unfolds, we could see a sharp shift.
There’s also a military angle that traders are closely watching. If the situation escalates and critical infrastructure in Iran, like bridges or power plants, is targeted, crude will likely stay elevated or push even higher. Any disruption to transit routes or production capacity has an immediate impact.
Just this morning, comments from Donald Trump pushed crude as high as $116.
If cooler heads prevail and a deal is reached, we could finally see relief at the pump and in energy-linked trades. But the direction from here depends entirely on the outcome, and a quick resolution seems unlikely.
How I’m Thinking About Oil Exposure
If you’re tracking crude, United States Oil Fund (USO) has been steadily gapping higher. It’s been a consistent climb as headlines continue to drive sentiment.
These are the kinds of sessions where prices jump early, pull back intraday, then catch another bid. That kind of action can shake traders out if they’re not prepared.
I’m not chasing it here, but I am watching closely because oil doesn’t move in isolation. When crude climbs like this, it impacts everything from industrials to consumer discretionary. Any company reliant on transportation or petroleum-based inputs feels the pressure.
Iran still has significant oil resources that could eventually come back online, but that’s a longer-term factor. Right now, markets are focused on immediate supply conditions, not what may happen months down the line.
For traders, the setup is straightforward: Stay nimble, watch for gaps that fail or extend and avoid assuming any move is finished just because crude pulls back briefly. Volatility tied to geopolitical events rarely resolves in a single move.
Keep your focus on the headlines over the next day. This one matters more than the usual noise.
Geof Smith
Geof Smith Trading
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