Crude oil surged past $111 per barrel on Thursday after President Trump warned that the U.S. military campaign in Iran would continue for “two to three more weeks.” West Texas Intermediate briefly touched $113 before settling near $111.56 — up over 12% for the week alone. The energy market’s reaction underscores a critical reality: as long as the Strait of Hormuz remains a contested chokepoint, oil prices will remain elevated regardless of ceasefire rhetoric.
The Strait of Hormuz carries roughly 20% of the world’s daily oil supply. Iran’s announcement that it is working with Oman on a “protocol” to monitor ships transiting the waterway briefly calmed markets on Thursday, pushing equities off their lows. But the details remain vague, and the strategic implications are far from resolved.
The macro impact is becoming tangible. Bank of America revised its 2026 global growth forecast down by 40 basis points to 3.1%, while marking up inflation expectations by 90 basis points to 3.3%. The International Energy Agency’s chief warned that “April will be much worse than March” for energy disruption.
Portfolio Implications
Energy stocks have been the clear winners of the conflict, with the S&P 500 Energy Sector outperforming the broader market by a wide margin. However, Thursday’s session showed the first signs of profit-taking in energy names as ceasefire hopes briefly surfaced. Smart Money data from our tracker shows that Stanley Druckenmiller — one of the most macro-aware managers we follow — had already rotated into energy positions before the conflict escalated.
For portfolio construction, the key question is duration: if the conflict resolves within weeks as Trump suggests, the energy premium will deflate rapidly. If it drags on, $120+ oil becomes a base case, with cascading effects on airline stocks, logistics, and consumer spending.
The BMInsider Fear & Greed Index currently reflects elevated fear driven primarily by geopolitical uncertainty and oil volatility. Historical data from our Iran War analysis suggests that markets typically recover within 6-12 months of oil shock peaks.