Live updates: Oil surges and stocks fall as Trump Iran war speech fails to calm nerves

Trump Iran war fears spike oil 7% as markets dump stocks after speech

Muhammad Asghar | GlobalBeat

Oil prices jumped 7% and global stocks dropped Monday after President Donald Trump said the U.S. was “prepared for war” with Iran.

Brent crude hit $82 per barrel while the S&P 500 fell 2.3% in its worst day since March.

Traders sold risk assets across the board after Trump delivered a prime-time address vowing to stop Iran’s nuclear program by “whatever means necessary.” The remarks came hours after Iranian speedboats allegedly tried to seize a commercial tanker in the Strait of Hormuz.

Investors ditched equities and poured into government bonds, gold and the dollar. The Cboe volatility index, Wall Street’s fear gauge, leapt to its highest level since October.

Energy shares were the only winners, with Exxon Mobil up 4% and Chevron gaining 3.8%. Defense contractors also rallied, sending Northrop Grumman up 5.2% and Lockheed Martin 4.1% higher.

European markets followed Asia into the red. London’s FTSE 100 closed down 1.8%, Frankfurt’s DAX dropped 2.1% and Paris shed 2.4%.

The sell-off extended to crypto, with bitcoin sliding 6% to $89,000.

Trump spoke from the White House for 18 minutes shortly after 9 p.m. Washington time, flanked by Defense Secretary Pete Hegseth and acting CIA director Edward Krebs. “Iran will never have nuclear weapons,” he declared. “If sanctions don’t work, other options are on the table, and I mean military options.”

He did not outline a timeline or say whether U.S. forces would strike first.

Iranian state TV carried the speech with a scrolling banner calling it “blatant psychological warfare.” Foreign Minister Abbas Araqchi tweeted that Iran would respond to “any aggression with full force.” Tehran’s ambassador to the United Nations later told reporters that U.S. bases across the region “are now legitimate targets.”

White House officials said National Security Advisor Mike Waltz convened an emergency meeting of the principals committee within minutes of the address. Energy Secretary Chris Wright joined by video from Houston, where oil executives have been lobbying for tighter enforcement of sanctions, according to an attendee who requested anonymity because the talks were private.

Oil analysts warned the market is pricing in a real chance of supply disruption. The Strait of Hormuz handles about 20% of daily seaborne crude shipments. “Even a brief clash could send prices toward $100,” said Helima Croft, head of commodity strategy at RBC Capital Markets. She cited satellite imagery this weekend showing a second U.S. carrier group entering the Gulf.

Shipping insurers in London raised war-risk premiums for tankers transiting the waterway four-fold on Monday, brokers told GlobalBeat. At least two Greek owners ordered vessels to anchor outside the strait until further notice, according to ship-tracking data.

Goldman Sachs raised its three-month Brent forecast to $95 from $82 after the speech. “Geopolitical risk has flipped from tail to base case,” analysts wrote in a note to clients. They warned any strike on Iranian export terminals could remove 1.5 million barrels a day from the market.

Treasury yields sank as investors sought safety. The 10-year note slid 12 basis points to 4.18%, its biggest drop since January. Bond prices move inversely to yields.

The dollar index climbed 0.9% against a basket of peers, hitting a one-month high. Europe’s common currency slipped below $1.08 for the first time since December.

Asian markets had already closed lower after China reported weaker-than-expected manufacturing data, but futures on Japan’s Nikkei tumbled another 2% in overnight trade. Brent crude, which serves as the global benchmark, opened sharply higher in Singapore and kept climbing through London hours.

Israeli Prime Minister Benjamin Netanyahu issued a brief statement backing Trump’s “determination” but stopped short of pledging Israeli military support. U.S. diplomats said Washington has not asked Jerusalem to stay on the sidelines, an omission that raised eyebrows in both capitals.

Saudi Arabia urged restraint in a foreign ministry communiqué, calling for “dialogue to resolve outstanding issues.” The kingdom’s oil output is already running near 10 million barrels a day, leaving limited spare capacity in the event of Iranian outages.

European Union foreign policy chief Kaja Kallas said Brussels is “gravely concerned” and offered to revive negotiations on curbing Iran’s uranium enrichment. Previous talks collapsed in 2022 after Tehran demanded guarantees that future U.S. administrations would honor any deal.

Congressional reaction split on party lines. Senate Majority Leader John Thune, Republican of South Dakota, said Trump “is right to project strength.” Democratic Whip Dick Durbin warned that “another Middle Eastern war would be a disaster for American families already stretched by tariffs and inflation.” Democratic leaders demanded a classified briefing this week.

Cryptocurrency markets buckled under the risk-off mood. Bitcoin slid to $89,000, its lowest level in a month, while smaller tokens Solana and XRP both dropped more than 7%.

Airline shares were hammered by the spike in jet-fuel prices. United Airlines fell 6.4% and Delta lost 5.7%, leading the S&P 500 lower. Cruise operator Royal Caribbean sank 5%.

Federal Reserve Chair Jerome Powell, speaking at a community banking conference in St. Louis, declined to answer questions on Iran. Traders scaled back expectations for interest-rate cuts this year, pricing in only one quarter-point reduction by December, compared with two before the speech.

Background

Tensions between Washington and Tehran have simmered since Trump withdrew the U.S. from the 2015 Iran nuclear deal in his first term and reimposed sweeping sanctions that crushed Iranian oil exports. Iran responded by breaching enrichment limits set by the accord and accelerating uranium purification to near weapons-grade levels. President Joe Biden tried to revive the agreement through indirect talks in Vienna, but negotiations stalled in 2022 after Iran demanded guarantees that no future U.S. administration could again abandon the pact.

The current standoff intensified in February when International Atomic Energy Agency inspectors reported Iran had enough fissile material for several bombs within weeks, a finding Tehran denies is aimed at building weapons. Last month the Revolutionary Guard test-fired a ballistic missile capable of striking Israel, prompting fresh U.S. penalties on Iranian banks and shipping firms. On Sunday U.S. naval forces said they foiled an attempt by three IRGC speedboats to board the Marshall Islands-flagged tanker MV Clara in the Strait of Hormuz, an incident Washington called “unsafe and unprofessional.”

What’s Next

U.S. Secretary of State Marco Rubio will brief United Nations Security Council members in New York on Tuesday as European powers push for a 60-day diplomatic pause. Meanwhile the aircraft carriers USS Harry S. Truman and USS Carl Vinson are expected to begin joint exercises in the Gulf on Wednesday, a show of force that U.S. commanders say is “routine” but Iranian media describe as “menacing.”

The next market moving event could be Iran’s response if European insurers continue to raise rates, potentially forcing Tehran to discount its already sanctioned crude. Analysts say Tehran exports roughly 1.2 million barrels per day to China through shadow tankers; disrupting that flow would tighten global supply and extend the price rally.

[GlobalBeat] Investors are watching weekly U.S. petroleum inventory data due Wednesday for signs of stock builds that could temper the oil surge, but the real price driver remains the prospect of military action before mid-month when Iranian naval drills are set to coincide with a scheduled carrier transit of Hormuz.