When I started looking into Iran this week, it became clear the story didn’t begin with recent headlines. It goes back to November 2023 when an Iranian proxy set off a chain of events that first tested the Biden administration and later drew a decisive response from Trump. Those actions ultimately led to an attack on Iran’s nuclear facilities.
The Strategic Backdrop
Winston Churchill once wrote that the United States is, above all, a naval power. That remains true today. For Washington, control of the Suez Canal and the Panama Canal is non-negotiable. The idea that any nation could block access to either is intolerable.
Starting on 19 November 2023, Houthi rebels in northern Yemen, funded and armed by Iran, began attacking ships bound for the Suez Canal. By February 2024, they had hit 40 vessels. By March, 200 ships had been forced to reroute around the Cape of Good Hope, adding time and cost. The Economist called it the worst Suez crisis since the 1950s.
How Biden Responded
The US moved quickly:
- 18 December 2023: Announced an international maritime force to break the blockade.
- 10 January 2024: The UN Security Council demanded an end to Houthi attacks.
- By early January: Houthis had already endured 931 US and UK airstrikes.
Despite these efforts, the attacks continued.
Trump’s Turn: Operation Rough Rider
When Trump took office, he made it clear the blockade would not stand. On 15 March 2025, he launched Operation Rough Rider, named after Theodore Roosevelt’s cavalry unit in the Spanish-American War. The US unleashed more than 1,000 airstrikes, ten times the previous pace. By 6 March, Trump announced the Houthis had agreed to a ceasefire brokered by Oman.
That victory exposed the real player behind the crisis: Iran. If Tehran could order the unthinkable, blocking the Suez Canal, what else was on the table? Trump concluded the next move was nuclear weapons.
The Strike on Iran
As Iran’s proxies collapsed, its air defences weakened. Trump seized the moment, ordering a bombing raid that crippled Iran’s nuclear program, some say destroyed it entirely. Iran fired 14 rockets at a US base in Qatar in retaliation but warned in advance. The attack had no real impact, though Tehran declared a “glorious victory.” In reality, it was a stunning reversal.
Markets breathed a sigh of relief. But the immediate effect was a sharp spike in oil prices followed by a pullback.
What’s Next for Oil Prices?
I ran two models on Brent crude using current fundamentals:
- Short-term model: Explains 63% of monthly price variation. Based on:
- US oil stocks, which are down recently due to summer driving season.
- US dollar index, as a weaker dollar supports higher commodity prices.
This gives an equilibrium price of $78.96, about $12 above today’s price.
- Medium-term model: Adds US CPI to account for rising production costs.
This pushes the equilibrium price to $97 per barrel, roughly $30 higher than current levels.
With the dollar still falling, upward pressure on oil remains strong. Even with the crisis resolved, I expect more price gains by year-end.
