Brent crude futures rocketed past $105 a barrel on Monday morning — roughly +4% on the day — after President Donald Trump publicly rejected Tehran’s latest peace counter-proposal as “totally unacceptable.” WTI followed it higher, briefly poking above $99 with a +4.6% intraday jump. Gasoline futures climbed. The dollar wobbled. Energy stocks ripped at the open.
The trigger was a Sunday-night Truth Social post that dismissed Iran’s response to the U.S. peace plan presented earlier in the week. Iran’s counter reportedly called for an immediate end to hostilities on all fronts, the lifting of U.S. sanctions, release of frozen assets, and full Iranian sovereignty over the Strait of Hormuz — with nuclear discussions deferred to a separate track. The U.S. wants curbs on enrichment and ballistic missiles baked into any deal. Neither side blinked.
The pattern keeps repeating
“Sundays are for peace. Mondays are for war.” Keith Kohl over at Energy & Capital nailed the exact rhythm last week. Friday closes calm, weekend headlines hint at progress, Monday morning the missiles fly and the bid returns to oil. We’re living the same cycle for the fourth or fifth consecutive week.
The fundamental problem hasn’t moved an inch. The Strait of Hormuz — where roughly 20% of global oil consumption normally transits — has been effectively closed since the war started in late February. Saudi Arabia is pumping and rerouting via the east-west pipeline to Yanbu on the Red Sea, but only ~4 million barrels per day can clear that way. Kuwait exported zero barrels in April for the first time in 30 years. The “Project Freedom” naval escort program Trump announced earlier this month only ferries ships out of the Strait — not in. The math doesn’t change.
Pre-war flows through the Persian Gulf were ~21 million barrels per day. Current flows after rerouting are maybe 9–10 mbpd if everything’s running perfectly. That’s 11–12 mbpd still locked out — and last week’s EIA inventory draws are starting to confirm the supply crisis is finally hitting refiners.
What the herd is missing
Even Goldman Sachs’s most aggressive forecast assumes Persian Gulf flows fully recover by the end of July. That’s almost certainly too optimistic — the Strait will need months to be cleared of mines after any ceasefire holds, and shut-in fields take additional months to restart. The structural pricing-in of “this resolves by Q3” still has not happened.
Meanwhile, the energy sector is quietly running away. Exxon’s market cap is up ~25% YTD to a $643 billion record. Chevron is up in the mid-20s percent to ~$400B. Gulf Coast refiners are running flat-out to feed European and Asian demand. The S&P 500 closed Friday at 7,398.93 — a record — and you can argue energy is one of the few sectors that earned the leg up rather than borrowed it.
The Play
This is not a “the war ends and oil goes back to $70” trade. The war ending doesn’t fix the supply chain — it just starts the clock on a multi-month restart. Until ships start going into the Strait, not just out, the oil bid stays sticky.
Cleanest exposures for the next leg: integrated supermajors with Gulf Coast refining footprint (XOM, CVX), pure-play refiners catching crack spread tailwinds (VLO, MPC, PSX), and oilfield services if you want torque (SLB, HAL). The pure E&P names are higher-beta but already have the geopolitical premium baked in.
One thing to watch this week: Tuesday’s CPI print. April energy was already running hot before this latest spike. If headline inflation surprises to the upside, the Fed’s “no cuts in 2026” base case gets even more entrenched — which is bullish dollar, mildly bearish gold, and a wash for stocks unless growth data softens.
Until next time, drink your tea hot — and your oil stocks long. 🍵