Oil Market Volatility Masks a Shifting Reality in the Middle East

The U.S.-Iran conflict escalated again on Thursday before abruptly swinging back toward diplomacy, producing another day of extreme volatility in both energy and financial markets. The escalation began after two days of renewed exchanges between Washington and Tehran following the downing of a U.S. Army helicopter near Hormuz earlier this week. On Tuesday and Wednesday, U.S. forces retaliated against Iranian targets, while Iran responded in kind. Early on Thursday, Trump threatened to seize Kharg Island, which handles Iran’s crude exports,…