This commodity ‘goes crazy’ next after Iran strikes, says prominent investor

Amid escalating tensions in the Middle East after the United States and Israel launched strikes on Iran, a prominent investor has warned that oil prices could surge sharply as the crisis deepens.

In this line, Rick Rule, founder of Rule Investment Media, said oil could spike dramatically if military action involving Iran escalates and threatens flows through the Strait of Hormuz.

In an interview with David Lin published March 2, Rule said the crude market would react aggressively to any credible attempt by Iran to disrupt traffic through the strategic waterway.

Even a temporary shutdown, or the threat of one, would have outsized financial and psychological effects on global markets. 

While prices could surge in the short term, he argued such a move would likely be temporary, as Iran lacks the long-term capacity to sustain a blockade. 

However, markets could take weeks to determine whether exports can be halted for an extended period, leaving room for heightened volatility.

“If Iran is capable of responding by temporarily shutting down the Strait of Hormuz or threatening to shut it down, the oil quote goes crazy. I mean, crazy. It won’t stay there because the Iranians don’t have the physical capability to ultimately blockade the Strait of Hormuz. They don’t have that capability,” Rule said. 

For now, Rule described West Texas Intermediate crude as trading largely on geopolitical headlines tied to Iran rather than underlying supply-and-demand fundamentals. 

Markets adequately supplied

He said global oil markets remain adequately supplied despite perceptions that sanctions on Russian and Iranian crude have significantly tightened output.

At the same time, Rule pointed to oil’s fungibility, arguing that embargoes have had limited practical impact as major buyers such as India and China continue purchasing crude.

While constructive on oil over a three- to five-year horizon due to expected structural supply-and-demand shifts, Rule maintained that those changes will unfold gradually.

In the near term, he sees crude prices as highly sensitive to developments surrounding Iran, with potential for sharp, headline-driven swings.

Meanwhile, global oil prices surged on Tuesday as the U.S. and Israeli campaign against Iran entered its fourth day, disrupting energy routes and raising fears of prolonged supply shortages. Brent crude jumped about 7% to as high as $85 per barrel.

The rally followed Iran’s retaliation to joint U.S.-Israeli strikes that began on February 28. Iranian forces have targeted tankers and regional energy infrastructure, effectively shutting the Strait of Hormuz, a chokepoint that carries roughly 20% of global oil and significant liquefied natural gas flows. The closure has stranded vessels and driven up insurance and freight costs.

Indeed, President Donald Trump has signaled operations could last weeks, though markets appear to be pricing in a contained conflict for now.

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