Oil Prices Spike Dramatically As Iran Ceasefire Extends, Negotiations Stall

Oil prices spiked on Wednesday, with Brent crude climbing over $100 per barrel, after President Donald Trump extended the ceasefire with Iran.

A second ceasefire extension likely caused worry for investors that negotiations are not progressing, which would account for the spike. Additionally, the U.S. benchmark — West Texas Intermediate crude — rose by more than 2% to above $90 a barrel. The national average for gas prices remains near $4 per gallon, which is the highest rate since 2022. 

The lack of progress in negotiations means that repeated Iranian attacks — in addition to the ongoing U.S. blockade of all ships heading to or from Iranian ports — continue to impact oil prices by limiting the amount of oil moving through the Strait of Hormuz.

Also on Wednesday, Iran attacked both a container ship and a cargo ship as they traveled through the strait. Iran claimed the ships had “entered the area without proper authorization and allegedly tampered with their navigation systems.” Iran has stated that it will not tolerate any disruption to the “order and safety of the Strait of Hormuz.”

U.S. indices stayed relatively flat in response, with the S&P 500 rising just below 1%. The Nasdaq is up 1.2%, and the Dow Jones up 0.7%. Oil futures continued to signal that within the next six months, oil could drop back down not only to the double-digits but could possibly even dip below pre-war prices. Late-2026 futures are trading near $40 per barrel, and expectations point to oil prices easing to the mid-$70s by the end of the year.

Most industries are feeling the impact of higher prices, but the global aviation sector in particular is experiencing significant disruption. Alaska Air and American Airlines have raised checked bag fees, and Alaska Air has withdrawn its profit forecast due to rising jet fuel costs.

Still, Treasury Secretary Scott Bessent told Congress on Wednesday he suspects oil prices will be down soon. “Future prices are much lower than we are at present. I think the conflict will end. I think gasoline prices will come back to where they were, or perhaps lower.”