Oil surges to $119 as Trump tightens squeeze on Iran, US strike plan ready

Trump told news outlet Axios on Wednesday that he would not cut off oil supplies, sending oil prices soaring. Blockade until Iran agrees to nuclear deal — “They’re suffocating like stuffed pigs, and it’s going to be worse for them.”

Later, the US president said that the two sides were talking on the phone, “Iran has come a long way, the question is whether they have gone far enough… Now, Iran can only say that we gave up.”

The Wall Street Journal reported on Tuesday that he came to this conclusion during a situation room meeting on Monday, where he weighed resuming bombing or leaving, judging both approaches to be riskier than continuing to squeeze Tehran’s oil revenue – a high-risk attempt at a nuclear surrender that Iran has long rejected.

Tuesday’s meeting included representatives from Chevron and trading houses Trafigura Group, Vitol Group and Mercuria Energy Group Ltd., according to White House officials. A spokesman for Chevron confirmed that CEO Mike Voss attended the meeting. Treasury Secretary Scott Bessant, who has led the government’s economic pressure on Iran, chaired the meeting. Other participants included Vice President J.D. Vance and White House Chief of Staff Suzy Wiles.

A ceasefire has been in place for about three weeks and bombings have stopped, but there has been no major breakthrough in the nuclear deal.

Participants discussed ways for the Trump administration to continue blocking Iranian ports if necessary while minimizing the impact on U.S. consumers. Officials and executives also spoke about the government’s efforts to address issues in the oil market, domestic production, oil futures, natural gas and shipping, as well as progress in Venezuela since the U.S. captured former Venezuelan leader Nicolás Maduro.

The U.S. squeeze on Iranian crude oil flows is central to the Trump administration’s strategy in the region. Bessant described the blockade as blocking crude sales, depriving Tehran of revenue while pushing more oil into storage and forcing the closure of some wells. Bessent posted on X on Monday that “Iran’s crumbling oil industry is beginning to shut down production” due to the blockade.

Among other measures, the administration issued and extended a temporary exemption allowing foreign ships to transport crude oil and other commodities between U.S. ports and eased sanctions to allow the purchase of some waterborne cargoes of Russian crude.

While Trump has said he will stick to the blockade, U.S. military commanders have prepared a plan to launch a brief but powerful strike against Iran to put pressure on the regime, Axios said, citing people familiar with the matter.

Iranian officials have shown no signs of backing down. Speaker Mohammad Bagher Ghalibaf accused Trump on Wednesday of trying to force Iran to surrender through economic pressure and internal divisions, the semi-official Tasnim news agency reported.

“Trump clearly divided the country into hardliners and moderates and then immediately talked about a naval blockade to force Iran to surrender through economic pressure and internal divisions,” Ghalibaf said in an audio message to Iranians, adding that the only solution “to confront the enemy” was national unity.

Trump claimed that divisions within the Iranian regime had slowed decision-making. US and Israeli attacks killed many of the country’s top leaders.

It’s unclear how much storage Iran has left and how long it has before it needs to shut down its wells, which could cause permanent damage to them. Analyst firm Kpler estimates it will take another 12 to 22 days.

Trump administration officials have repeatedly said oil and gasoline prices will fall after the war ends. But rising commodity prices are weighing on the government ahead of midterm elections in November that will determine whether Trump’s Republicans can maintain control of Congress.

Four officials voted against the decision, with three objecting to language in the post-meeting statement that suggested the central bank would eventually resume cutting interest rates.

Cleveland Fed President Beth Hammack, Minneapolis Fed President Nir Kashkari and Dallas Fed President Lori Logan “support maintaining the target range for the federal funds rate but do not support the current inclusion of an easing bias in the statement,” the committee said.

Governor Stephen Miran disagreed with lowering interest rates by a quarter of a percentage point.

The 8-4 vote marked the first time since October 1992 that four officials have challenged an FOMC decision. The committee kept the benchmark federal funds rate at a range of 3.5% to 3.75%.

The S&P 500 and U.S. Treasury index remained lower following the decision.

Ahead of the meeting, investors and economists widely expected the Fed to keep interest rates on hold for the remainder of the year.

Officials modified their statement slightly to say “developments in the Middle East have led to a highly uncertain economic outlook.” They had previously said the economic impact of the conflict was uncertain.