Trump, Netanyahu Talk Gaza Phase Two as Iran Risk Stirs Oil

Mar-a-Lago meeting puts Gaza phase two and Iran back on traders’ screens

U.S. President Donald Trump met Israeli Prime Minister Benjamin Netanyahu at Mar-a-Lago on Monday, Dec. 29, 2025, as Washington pressed to move a fragile Gaza ceasefire into phase two, which would bring international peacekeepers into the territory under a U.N. Security Council mandate dated Nov. 17. The meeting also revived an Iran tail risk, after Trump said the United States could support another major strike if Tehran resumes rebuilding ballistic missile or nuclear weapons programs, months after a June confrontation that lasted 12 days.

The market channel is straightforward and immediate, even without a new disruption in physical supply. Talk of another Iran strike lifts the probability of a short-notice energy shock, while any slippage in the Gaza plan keeps shipping and insurance pricing sensitive around the Red Sea arc. In early trading this week, Brent stayed in the low-$60s per barrel and oil hedges moved back into play for portfolio managers who had trimmed geopolitical protection after the October ceasefire.

Disarmament dispute keeps the ceasefire’s hardest step unresolved

Trump said he wants to move to phase two of the Gaza deal reached in October, but the next stage hinges on disarmament and governance, and both have become sticking points. Hamas has refused to disarm, and Israeli forces remain entrenched in about half of Gaza, a reality that has fueled accusations of breaches on both sides and kept the ceasefire fragile into year-end.

Netanyahu has framed the next phase as conditional on Hamas giving up weapons and exiting any governing role. Israel has indicated that if disarmament is not achieved through negotiations, it would resume military operations to force the issue, a threat that keeps defense, energy and risk assets tightly correlated to political headlines.

A hostage remains and Rafah crossing timing become gating items

A key tactical condition emerged from Netanyahu’s circle: Israel wants Hamas to return the remains of the last Israeli hostage believed to be in Gaza before the process advances. Ran Gvili’s family joined Netanyahu’s entourage for the Florida visit, underscoring how the first phase’s completion is being tied to a specific deliverable rather than a broad political statement.

Israel has also yet to open the Rafah crossing between Gaza and Egypt, which is included in the plan’s conditions. Linking Rafah to a return of remains sets a short-term timetable, and it creates a clear trigger for markets: progress can reduce a regional risk premium, while delay can keep oil protection demand elevated and the Israeli shekel prone to abrupt swings.

Peacekeepers and transitional governance raise operational questions

Phase two is built around the deployment of international peacekeepers in Gaza and a transitional governance framework acceptable to Israel and key regional states. Trump said the second stage entails an international security presence, and Netanyahu has signaled reluctance to accept arrangements that leave Hamas able to reassert authority as Israeli troops draw down.

The meeting also touched on Turkey as a potential contributor to a peacekeeping force, an option that carries political friction given periodic strains between Ankara and Jerusalem. Adding Turkey to the conversation increases the number of veto points, and each additional veto point extends the window in which markets price uncertainty.

Iran strike language adds an energy and credit risk layer

Trump’s warning on Iran centered on the idea that Tehran could rebuild capabilities at new sites after the June strikes, and he referenced the use of B-2 bombers, describing a 37-hour trip as a logistical burden he does not want to repeat. Iran has signaled military readiness, including missile exercises reported in December, and Netanyahu has said Israel is monitoring Iranian activity closely.

For investors, the Iran strike risk premium shows up first in crude volatility and then in sovereign credit and regional equities. Even if spot oil is steady, options often reprice quickly when the probability of escalation rises, and that repricing can spill into airline costs, petrochemicals margins, and emerging-market energy importers’ balance sheets.

Oil is not spiking, but hedges and positioning are shifting

Oil did not surge on the day of the meeting, but the tone can matter as much as the tape. Ed Meir, an analyst at Marex, said that renewed geopolitical tension has been colliding with expectations of a well-supplied market, and he has pointed to a “growing oil glut” as a reason prices could trend lower in the first quarter of 2026 unless disruptions intensify.

That combination encourages two-way trades: downside bets on oversupply paired with event-driven oil hedges for a sudden Middle East shock. In practice, that can keep Brent range-bound while lifting the cost of protection, and it can favor integrated majors with diversified cash flows over high-beta exploration names.

The Israeli shekel, bonds and defense names are the fastest political barometers

Israel’s financial assets tend to react first to ceasefire credibility and to signs of U.S. backing for Israeli security demands. When negotiations look durable, the shekel typically strengthens and Israel’s dollar bonds can rally on a lower default-risk narrative tied to reduced military spending volatility. When talks stall, the move often reverses, particularly in thinner holiday liquidity and in options markets.

Defense names can also react when a peacekeeping plan is discussed alongside conditional threats of renewed combat. Orders and procurement expectations are not rewritten overnight, but flows can shift quickly toward contractors perceived as positioned for replenishment cycles after multiple regional conflicts in 2025.

Shipping and insurance costs remain the quiet transmission mechanism

Even without a new maritime incident, shipping war-risk pricing can react to perceived escalation probability. During mid-2025 regional flare-ups, industry sources cited war risk premiums for some Middle East Gulf voyages rising toward about 0.5% from roughly 0.2%–0.3% within a week, a move that can add significant cost to high-value cargoes. David Smith, head of marine at insurance broker McGill and Partners, has described war-risk rates as “subject to constant change,” reflecting how quickly underwriters adjust when threat assessments shift.

If phase two stalls and the conflict environment hardens, shipowners and insurers typically respond by repricing routes and, in some cases, altering schedules. That is a direct input into delivered energy costs and into inflation expectations for import-dependent economies, even when crude benchmarks remain calm.

What to watch next

The first trigger is whether Hamas takes any concrete step toward disarmament in early January 2026, because that is the central condition Netanyahu set for progress beyond the current phase. The second is the status of Ran Gvili’s remains and whether Israel links any further withdrawals or aid steps to that return, a narrow condition that can still move broader risk sentiment. The third is whether the Rafah crossing opens under the plan’s terms, which would mark an operational milestone rather than a rhetorical one. A fourth is whether international peacekeepers in Gaza move from concept to commitments, including which countries would contribute and under what rules of engagement. A fifth is any new signal on U.S.-Iran contacts, because diplomacy lowers the strike probability that currently stirs oil hedges.