Oil prices climbed sharply on August 17, 2026, after President Donald Trump publicly rejected extending a diplomatic framework with Iran, erasing much of the prior week's decline and reviving anxieties about sustained supply disruptions through the Strait of Hormuz.
Brent crude briefly rose above $91 a barrel before closing up 2.65% at $90.87. U.S. West Texas Intermediate (WTI) gained 2.5%, settling at $84.50 per barrel, according to NBC News.
The jump came on the day the ceasefire was due to expire. A framework deal reached in June through Pakistani mediation had opened a 60-day negotiating window. That window closed without a comprehensive settlement, according to KOMO News.
Speaking to reporters, Trump said he was not seeking an extension. "They want to make a deal, but they're not going to make the kind of a deal that I feel is necessary," he said, according to NBC News.
The conflict between the United States and Iran began on February 28, 2026, and has since restricted shipping through the Strait of Hormuz, a critical passage for global energy shipments. Frank Walbaum, a market analyst at Naga.com, said negotiations have reached a stalemate and that traffic through the strait remains restricted, according to Channel News Asia.
Tehran has set a firm condition for fully reopening the waterway. "As long as the U.S. naval blockade continues, the necessary conditions for the reopening of the Strait of Hormuz do not exist," Iran's Foreign Ministry spokesman Esmail Baghaei said, as reported by CNBC.
The August 17 surge followed an unusual week in the other direction. Oil had sold off more than 7% after Treasury Secretary Scott Bessent signalled that a Hormuz deal could come soon. No agreement materialised, according to CNBC. The cycle — presidential optimism briefly deflates prices, diplomatic failure pushes them back — has repeated several times since the war began.
In May 2026, Brent settled as high as $104.21 a barrel after Trump said the ceasefire was "on life support." At that point, Saudi Aramco chief executive Amin Nasser warned the world had lost about 1 billion barrels of oil over the prior two months, according to Reuters.
Prices are now nearly 50% higher than at the start of 2026 and more than 25% higher than when the war began. U.S. gasoline averaged $4.06 per gallon on August 17, up 36% since the conflict started, according to KOMO News.
Analysts disagree on how much further prices can go from here. Bjarne Schieldrop of SEB Research said oil is unlikely to move substantially higher unless crude flows through Hormuz stop entirely at night or the Bab el-Mandeb Strait — another key waterway in the region — closes, according to Channel News Asia. JPMorgan analysts expect prices to remain in the low $100s for most of the remainder of 2026, averaging $97 for the year, with no quick normalisation even after Hormuz reopens, according to Reuters.
Whether Washington and Tehran will resume talks after the ceasefire expiry, or whether the breakdown marks the start of a new phase of escalation, remains unknown.
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