President Donald Trump’s suggestion that the U.S. could end its war with Iran within two or three weeks gave investors a reason to push stocks higher and welcome a temporary easing in oil prices. But economists and energy analysts caution that the optimism may prove fragile unless Iran soon agrees to reopen the Strait of Hormuz, the shipping corridor at the center of the global energy shock.
That is the crucial distinction now facing markets. A winding down of direct U.S. military operations might reduce immediate geopolitical tension, but it would not by itself restore oil flows through one of the world’s most important chokepoints. If the strait remains effectively closed or too dangerous for normal navigation, crude prices could continue to rise even in a scenario where the White House presents the conflict as moving toward an end.
The message from analysts is increasingly stark. Markets may be reacting to the idea of de escalation, but the real driver of energy prices remains physical supply. Until traders see a credible path to restoring normal transit through Hormuz, the risk of renewed upward pressure on oil, gasoline, and inflation will remain high.
Markets respond to Trump, but the key issue remains unresolved
Trump’s comments to reporters on Tuesday that he expects the war to end in two or three weeks helped improve sentiment because they hinted at a shorter conflict than some investors had feared. Lower oil prices and stronger stocks reflected that relief. Yet economists quickly warned that the more important question is not the timeline of U.S. military involvement alone, but whether the Strait of Hormuz actually reopens.
Trump has made clear that the United States could halt its operations without necessarily requiring the full reopening of the strait, effectively leaving other countries to deal with Tehran’s control of the waterway. That possibility is why analysts remain cautious. A ceasefire or partial de escalation may not be enough to reverse the supply shock if the route remains constrained.
The uncertainty is now focused on Trump’s next message. He is scheduled to address Americans on the war, and energy specialists expect oil and gas prices to react quickly to anything he says about Hormuz. If he offers no meaningful clarity on the shipping corridor, analysts believe markets are likely to return their attention to the hard reality of restricted supply.
Why Hormuz matters more than the ceasefire talk
The Strait of Hormuz handles roughly a fifth of the world’s oil and natural gas supply each day, making it one of the most strategically important passages in the global economy. Normally, about 20 million barrels of oil move through the strait every day. Since the war began in late February, that volume has reportedly been reduced by as much as 16 million barrels.
That is why economists see the waterway as the real center of the crisis. Oil demand is relatively inelastic, meaning consumers and businesses cannot quickly reduce consumption when prices rise. At the same time, there are no easy substitutes for the volume normally moving through Hormuz. If supply remains trapped or severely limited, prices can rise sharply even without any new military escalation.
Paul Krugman warned that scenarios involving $150 a barrel oil are highly plausible and that prices reaching $200 cannot be ruled out. Those projections reflect the scale of the disruption rather than just market fear. The longer the strait stays blocked or dangerous, the greater the mismatch between global supply needs and actual available flows.
Consumers are already starting to feel the strain
For American households, the effect is already visible at the gas station. The average U.S. price of gasoline rose to $4.06 a gallon on Wednesday, the highest since August 2022. Analysts at Oxford Economics and GasBuddy said prices could move higher in the near term, with projections pointing to a range of $4.12 to $4.15 a gallon if uncertainty around the strait continues.
That would represent more than a temporary inconvenience. Higher gasoline and diesel prices feed directly into transportation costs, consumer budgets, and inflation expectations. Bridget Payne of Oxford Economics said the pass through effect into broader consumer prices becomes more severe the longer oil supply stays offline, because energy costs eventually spread well beyond fuel itself and into the wider economy.
Even emergency efforts by the Trump administration to boost supply during the conflict may lose effectiveness over time. Analysts argue that such measures cannot come close to replacing the scale of oil lost through Hormuz. That means the protection they offer consumers may prove limited if the disruption drags on for weeks rather than days.
Even a quick de escalation may not restore the old normal
One of the most important warnings from energy analysts is that the market may not return to prewar conditions even if the conflict cools relatively soon. Matt Bernstein of Rystad Energy said oil prices are likely to stay elevated even if the United States moves quickly to pull forces out of the region. The reason is that geopolitical and financial risks around Gulf trade have already changed the market’s assumptions.
That suggests the damage is no longer just about the immediate military phase. Even if the strait gradually reopens over the next few weeks, the higher risk attached to shipping, insurance, and trade through the Gulf could keep energy prices above old norms for a prolonged period. In that sense, investors may be correct that the war itself could end fairly soon, but wrong to assume the economic aftershocks will fade just as quickly.
The current relief in markets therefore depends on a condition that has not yet been met. Unless there is a clear and credible reopening of Hormuz, oil may remain under strong upward pressure and consumers may face more pain ahead. The war may be moving toward a political turning point, but for energy markets, the decisive issue is still the same narrow strip of water that has yet to return to normal.
