Oil prices surged more than 5% on Thursday before paring gains after President Donald Trump said the United States would not launch an attack on Iran before the November midterm congressional elections. The sharp reversal underscored the extent to which geopolitical risk and potential supply disruptions are currently driving crude markets, with traders responding rapidly to developments across the Middle East and the U.S. energy sector.

Crude Prices React Sharply to Iran Risk

Brent crude futures were up $3.48, or 3.5%, at $103.73 a barrel by 12:41 p.m. ET, while U.S. West Texas Intermediate gained $2.69, or 3.1%, to $91. At their session highs, both contracts had risen by more than $5 a barrel, with Brent reaching its highest level since September 29.

The initial rally reflected concerns that an imminent U.S. strike against Iran could trigger a broader disruption to regional oil supplies. The subsequent decline from session highs after Trump’s comments demonstrated how quickly expectations surrounding military action can alter the pricing of geopolitical risk in crude markets.

Strait of Hormuz Remains a Critical Supply Risk

The market’s sensitivity extends beyond the prospect of direct military action. Tankers operating in the Strait of Hormuz suffered heavy attacks last week, raising concerns about the security of one of the world’s most strategically important energy routes. Any prolonged disruption to shipping through the waterway could have consequences well beyond regional markets by restricting the movement of crude and refined products.

Additional geopolitical developments are also contributing to uncertainty. Syria is considering whether to support a Saudi campaign against the Houthis, according to sources cited in the report. Such developments add another variable to an already complex regional security environment and make it more difficult for energy markets to assess the duration and scale of potential supply disruptions.

U.S. Supply Risks Add to Market Volatility

Oil markets are also dealing with supply concerns closer to home. Hurricane Isaias has raised the prospect of production losses in the U.S. Gulf of Mexico, while Shell, Chevron and BP have curtailed Gulf output. The combination of potential U.S. production losses and Middle East supply risks is reinforcing concerns about the availability of crude in the near term.

For global energy markets, simultaneous disruptions across major producing regions can have an amplified effect, particularly when inventories and spare capacity are already closely monitored. The current environment therefore leaves crude prices unusually responsive to developments that might otherwise have had a more limited impact.

What Comes Next for Oil Markets?

Trump’s statement temporarily reduced expectations of an imminent U.S. military escalation, but it does not remove the underlying supply risks. Markets will continue to monitor developments involving Iran, the Strait of Hormuz, Houthi attacks and Gulf production, while also assessing the impact of weather-related disruptions in the United States.

Going forward, the direction of crude prices will depend heavily on whether geopolitical tensions translate into sustained physical supply losses or remain primarily a risk premium in futures markets. The sharp intraday reversal highlights the challenge facing energy investors: even without an immediate supply shock, changes in geopolitical expectations can produce substantial price movements within a single trading session.