NextFin News - Crude oil prices stabilized on Tuesday as the White House signaled a pivot in its military strategy toward Tehran, declaring the "offensive phase" of the conflict over. U.S. Secretary of State Marco Rubio announced that Operation Epic Fury, the combat mission launched in February, has officially concluded. The shift moves the U.S. military into a "defensive operation" focused on escorting commercial vessels through the Strait of Hormuz, a critical chokepoint that carries roughly 20% of global oil supply.
The transition in military posture follows a letter from U.S. President Trump to congressional leaders stating that hostilities have "terminated." This move appears designed to bypass the 60-day deadline for congressional approval under the War Powers Act, a maneuver that has drawn sharp criticism from lawmakers like Senator Adam Schiff. While the administration maintains that the ceasefire reached last month remains in effect, Defense Secretary Pete Hegseth clarified that the U.S. remains prepared to use force to "guide" stranded ships through the strait. The Pentagon reported that since the truce began, Iranian forces have fired at commercial vessels nine times and attacked U.S. assets on more than ten occasions, yet the administration continues to classify these as sub-threshold provocations that do not invalidate the broader ceasefire.
Market participants are weighing these geopolitical shifts against a backdrop of significant price volatility. Ed Morse, a senior advisor at Hartree Partners and a veteran energy analyst known for his historically bearish outlook on long-term oil prices due to shale supply, suggested that the "war premium" is finally starting to erode. Morse argued in a recent briefing that the formal end of offensive operations removes the immediate threat of a full-scale invasion of the Iranian mainland, which had been the primary driver of the triple-digit price floor. However, Morse’s view that prices will continue to soften is not a universal consensus. Many analysts at major investment banks remain cautious, noting that a "defensive" naval mission in the world’s most sensitive waterway is still a high-stakes environment where a single miscalculation could reignite the conflict.
The economic stakes of the blockade remain severe. While the U.S. is deploying warships, jets, and drones to reopen the Strait of Hormuz, the physical flow of oil has not yet returned to pre-war levels. The current Brent price of $110.16 remains nearly 40% higher than prices seen a year ago, reflecting the reality that "defensive" status does not equal "peace." For energy-importing nations, the cost of insurance and freight for tankers remains at record highs. U.S. Secretary of State Rubio has reportedly urged China to use its influence with Iranian Foreign Minister Abbas Araghchi, who is currently traveling to Beijing, to warn that continued interference with shipping will lead to total global isolation for Tehran.
The durability of this price decline depends heavily on whether the "defensive" phase can actually restore transit volumes. If the U.S. Navy successfully escorts tankers without drawing a major Iranian response, the supply-side pressure may ease further. Conversely, the legal and political battle in Washington over the War Powers Act suggests that U.S. President Trump’s domestic authority to sustain this mission is under pressure. If Congress successfully challenges the administration’s "terminated" status, the resulting uncertainty over U.S. military commitment in the Gulf could lead to a renewed spike in volatility. For now, the market is taking the White House at its word, betting that the most explosive chapter of the 2026 Iran war has passed.
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