Oil prices rise as US and Iran exchange strikes, putting peace deal in doubt

Just one day after oil markets rallied on hopes of a US-Iran peace deal, American military strikes on targets in southern Iran sent Brent crude surging back above $98 per barrel on May 26. American military strikes on targets in southern Iran sent Brent crude surging back above $98 per barrel on May 26.

Bitcoin dropped below $73,000 in the aftermath, with over $1 billion in liquidations hitting the market as traders dumped riskier positions.

A tale of two trading days

On May 25, Brent crude fell 5% as markets priced in the possibility of a diplomatic resolution. The thinking was straightforward: a deal could reopen the Strait of Hormuz, ease supply concerns, and bring Iranian barrels back into global markets.

By May 26, US strikes on Iranian positions had pushed Brent crude back to between $98 and $102 per barrel, a jump of more than 2%. The peace talks that Pakistan and Qatar had been helping to facilitate suddenly looked like a footnote rather than a framework.

The Strait of Hormuz carries roughly 20% of all global oil transit. Any military escalation near it functions like a tax on the entire global energy supply chain, and markets price that risk in immediately.

The ongoing US-Iranian conflict, which has featured multiple military actions since early 2026 including a US naval blockade and Iranian threats against shipping routes, has turned the region into a rolling source of supply uncertainty.

Crypto catches the shrapnel

Bitcoin’s slide below $73,000 wasn’t just a crypto-specific event. Over $1 billion in liquidations tells you how aggressively traders had been positioned for upside. When oil prices jump on military action, it triggers a chain reaction: inflation expectations rise, rate cut hopes dim, and suddenly the macro backdrop for risk assets looks considerably worse.

What this means for investors

A sustained move in Brent crude above $100 per barrel would have cascading effects on inflation expectations globally, and that’s the scenario markets are now forced to consider.

Preliminary talks mediated by Pakistan and Qatar had shown promise, but military escalation has a way of making negotiations exponentially harder. Each strike creates new political constraints on both sides, making concessions more difficult to sell domestically.

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