Iran War: Strait of Hormuz Crisis Sends Oil Past $120

On February 28, 2026, US-Israeli attacks on Iran triggered a widening confrontation that by April 7 is still without a ceasefire. Multiple outlets highlight a looming US deadline tied to Iran’s posture around the Strait of Hormuz, with Donald Trump issuing a stark warning while also stating Iran has time to “capitulate.” Israeli Prime Minister Benjamin Netanyahu told audiences that the campaign against Iran’s regime is being “crushed” with increasing intensity ahead of Trump’s deadline. In parallel, Italy’s Defense Minister Guido Crosetto defended the government’s decision to deny the US use of an Italian air base for operations in Iran, framing it as adherence to long-standing procedures. Separately, Pakistan’s Prime Minister Shehbaz Sharif urged fuel conservation and austerity, explicitly linking domestic hardship to the ongoing Middle East war. Strategically, the cluster shows a coercive timeline: Washington is using a deadline to pressure Tehran while Israel escalates kinetic pressure to shape bargaining leverage. The reported efforts by Pakistan to broker a ceasefire indicate that regional intermediaries are trying to prevent the Strait from becoming a sustained choke point, even as rhetoric from both Washington and Jerusalem hardens. Italy’s base-access denial underscores that coalition support for operations is not uniform, creating friction in allied force posture and complicating US operational planning. The conflict also appears to be driving a broader security-energy contest in the Gulf, where control of shipping lanes and LNG export routes becomes a central bargaining asset. Markets and diplomacy are therefore moving together: the closer the deadline, the more actors hedge through alternative supply channels and risk pricing. Energy markets are already repricing the risk of disruption. European natural gas prices reversed an earlier spike as traders assessed the impending US deadline and ongoing ceasefire-brokerage efforts, with the Dutch TTF front-month contract down about 2.0% to 49.16 euros per unit in the cited report. Shipping and commodity risk are also showing up in cross-asset signals: investors are monitoring Hormuz-related uncertainty while industrial commodities such as iron ore futures rebound as Chinese trading resumes after a holiday-extended weekend. Korea’s plan to send special envoys to Saudi Arabia, Oman, and Algeria to secure alternative crude supplies signals that crude diversification is becoming a policy priority, which can tighten regional supply balances and raise near-term freight and insurance costs. The combined effect is a risk-off energy impulse that can transmit into equities tied to defense and energy logistics, and into FX and rates via inflation expectations if the Strait threat becomes credible. What to watch next is whether the US deadline produces either a de-escalatory signal from Tehran or a further escalation step from Washington and Israel. Key indicators include any formal movement toward reopening the Strait of Hormuz, changes in shipping insurance premiums and reported vessel routing behavior, and additional statements from Netanyahu and Trump that clarify whether the deadline is linked to specific Iranian actions. On the diplomatic side, track Pakistan’s ceasefire-brokerage progress and whether third parties expand mediation, as well as any further allied posture changes like Italy’s base-access stance. In parallel, monitor energy-market triggers: sustained direction in TTF, LNG and crude differentials, and announcements of additional crude-supply diversification by other importers. A practical escalation trigger would be renewed attacks or credible blockade signals around Hormuz; a de-escalation trigger would be verifiable corridor reopening steps paired with a pause in kinetic activity.

Geopolitical Implications

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  NATO cohesion tested as UK grants base access but France declines

Key Signals

• —Watch for US Congressional vote on war authorization