Oil rises and stocks fall after Trump signals new Iran strikes
Brent crude reached a two-week high after Trump said a US-Iran understanding was likely over and warned of further attacks.
By Lucas Ferreira · Science & Environment Writer
3 min read
Global markets weakened Wednesday after US President Donald Trump said a memorandum of understanding with Iran to end the conflict was likely finished and warned of more US strikes. Al Jazeera and Reuters reported that the comments pushed oil higher, hit travel shares and pulled major Wall Street indexes lower at the open.
According to Al Jazeera and Reuters, the Dow Jones Industrial Average opened down 0.8%, the Nasdaq Composite fell 0.2% and the S&P 500 lost 0.5% after Trump’s remarks at the NATO summit in Turkiye. Brent crude, the international oil benchmark, rose 4.2% to $77.24 a barrel, its highest level in two weeks.
Trump told reporters before meeting Ukrainian President Volodymyr Zelenskyy that the United States was preparing to strike Iran again Wednesday night. “We’re going to hit them hard tonight,” Trump said, adding that it “may be a big attack,” according to Al Jazeera and Reuters.
The market moves followed renewed tension around the Strait of Hormuz, a major oil route. Al Jazeera reported that roughly one-fifth of the world’s oil moves through the waterway, where attacks on tankers had preceded a wave of US strikes across Iran.
The Iranian Revolutionary Guard Corps said it had targeted US military sites in Bahrain and Kuwait in response to the US attacks, according to Al Jazeera and Reuters. The United States also revoked a licence that had allowed Iran to sell oil, the outlets reported.
Oil prices had been falling in recent weeks from a late-April peak of $126 a barrel, according to Al Jazeera and Reuters. The decline came as a mid-June deal appeared close to ending the war and allowing energy shipments through the Strait of Hormuz.
Trump had said after the June understanding that US petrol prices would “drop like a rock,” Al Jazeera reported. Prices did fall from $4.48 a gallon in May to $3.79 a gallon, according to the American Automobile Association, but remained above the $2.98 level recorded on February 28, when the US and Israel first struck Iran.
Ryan Sweet, chief global economist at Oxford Economics, told Al Jazeera that the US-Iran peace agreement was the main risk for the second half of the year. Sweet said the agreement would help decide whether the global economy gets relief from lower energy costs or faces another oil shock.
Trump also told reporters that oil tends to rise when the US attacks Iran, while arguing that domestic output gives the United States a buffer. “We are producing more oil than Russia and Saudi Arabia combined,” Trump said, according to Al Jazeera and Reuters.
US Treasury Secretary Scott Bessent echoed Trump’s comments Wednesday, saying he thought US oil could potentially trade at a premium to global crude, Al Jazeera and Reuters reported.
Airline shares fell as investors weighed the risk of higher fuel costs. United Airlines dropped 3%, Southwest Airlines fell 2% and Delta Air Lines lost 2.4%, according to Al Jazeera and Reuters.
Energy stocks moved higher with crude. ConocoPhillips rose 1.8%, Chevron gained 1.5% and ExxonMobil advanced 1.4%, Al Jazeera and Reuters reported.
Gold also declined. Spot gold fell 0.8% to $4,072.69 an ounce after touching its lowest level since July 2 earlier in the session, while August US gold futures dropped 1.8% to $4,083.20 an ounce, according to Al Jazeera and Reuters.
This story draws on original reporting from Al Jazeera.