US and Iran Clash Again After a Month's Lull, Oil Touches $90
US Central Command announced it had preemptively struck an Iranian unit laying naval mines. President Trump posted forceful remarks on Truth Social, branding Iran a failed state, citing inflation near 300%, accusing it of suppressing protesters, and stating it should be tried for war crimes. He also posted an AI-generated video depicting a potential strike on Iran, and the market took this as a sign that military tensions would not ease easily. As a result, WTI crude surged past $85 intraday, briefly nearing $90, and currently trades around $86.8.
Iran had appeared to exercise military restraint following last month's peace agreement, but this time the United States struck first, and Iran signaled retaliation against US bases in locations such as Jordan while showing signs of resuming mine-laying. Lee Kwang-soo explained that Iran views Trump's midterm election timeline as a point of leverage, calculating it can hold out simply by controlling the Strait of Hormuz, while the United States, conversely, believes time is not on its side — a structural dynamic that makes negotiation difficult.
Treasury yields also jumped in tandem, with the US 10-year rising to 4.778%, the 2-year to 4.354%, and the 30-year to 5.27%. President Trump announced a large-scale oil deal with Venezuela aimed at lowering oil prices, involving the acquisition of a 20-30% stake in Venezuela's state oil company and securing control over roughly half of the country's crude export volume for the next 100 years. However, Venezuelan crude is heavy oil that is difficult to refine, requiring time and investment to convert existing refining facilities, and analysts noted that actual production increases would take at least eight years to materialize, leaving the market skeptical of any immediate stabilizing effect on oil prices.
The US Department of Defense signed seven-year long-term contracts with General Dynamics and Lockheed Martin to expand production and accelerate delivery of THAAD and Patriot interceptor missiles. Lee Kwang-soo noted that given the exposed shortage of weapons inventory, a prolonged standoff accompanied by economic pressure appears more likely than an escalation into full-scale war.