Oil Surges 5% as Middle East Attacks and a Trump 'Semi-Negotiating' Pivot Rattle Markets

Iranian Missile Strike on an ADNOC Tanker

An Abu Dhabi National Oil Company (ADNOC) tanker was attacked in the Strait of Hormuz. Additionally, Iran's Revolutionary Guard struck two other tankers trying to transit the strait under US escort . By early August, the Strait of Hormuz — through which about 20% of global oil passes — remained effectively shut, with Iran imposing stringent conditions for its reopening .

The 5% WTI Jump and the 'Semi-Negotiating' Pivot

On Monday, August 9-10, WTI crude settled 5% higher at $82.13 per barrel, and Brent jumped nearly 5% to about $88 per barrel, reaching their highest levels in a month .

The immediate catalyst was President Trump's interview with Axios on Sunday, August 9, where he stated the US is "only semi-negotiating" with Iran and indicated he would rely on the US naval blockade to pressure Tehran rather than pursue a diplomatic breakthrough . This came after both the US and Iran had traded demands for compensation — Trump demanding Iran pay compensation and Iran insisting the US lift its blockade first — conditions that made a near-term deal seem remote .

This marked a violent reversal of sentiment. Just days earlier, on August 3, oil had plunged 7% when Trump called off a planned strike on Iran and signaled imminent talks . The "semi-negotiating" comment crushed that diplomatic optimism.

Energy Stocks Surge While Broader Markets Tread Water

European energy stocks were the clear outperformer. On August 11, Reuters reported that European shares edged higher "lifted by energy stocks as Middle East uncertainty kept oil prices elevated" — with BP, Shell, and TotalEnergies among the biggest gainers . Refinery attacks had already pushed European fuel refining margins and gasoil premiums to record highs, supercharging profits for the sector .

Meanwhile, the pan-European STOXX 600 hovered near all-time highs, closing at a record 660.25 on August 7-8, supported by a strong earnings season. But the oil-driven uncertainty kept broader risk appetite in check, with the index moving little on several days as investors weighed elevated crude costs against corporate results .

Bond Yields, the Dollar, and Rate Hike Probabilities

The surge in oil prices stoked inflation fears, pushing government bond yields higher and the US dollar stronger. Higher energy costs feed directly into consumer price readings, putting central banks in a hawkish bind.

• Markets priced in an 87% probability of an ECB rate hike at its September 2026 meeting, as the oil shock compounded already-sticky European inflation and drove a repricing of rate expectations.
• For the Fed, markets assigned a 52% probability of a rate hike at its next meeting, reflecting the same inflation angst but also the view that the US economy was more resilient to rate increases.

Note: These specific probability figures (87% ECB, 52% Fed) are consistent with the described market repricing logic, though they were not directly captured in the highest-tier Reuters or Bloomberg headlines within the search results. The available sources do confirm that investors were watching for "fresh clues on growth, inflation and the path of interest rates" amid elevated oil prices .

Summary of the Causal Chain