Oil spikes, equity stocks slump as President Trump commits to hitting Iran “extremely hard” over the next 2 to 3 weeks
The ongoing war threatens to bring about an even more pronounced disruption to energy supplies, with negative ramifications for economic activity and financial markets.
West Texas Intermediate oil futures spiked double digits and US equity futures slid after President Donald Trump said the US military operations against Iran would continue over the next two to three weeks.
In his prime-time address, the president said the US would hit Iranian targets “extremely hard” during this period, and that he would also consider hitting Iran’s electric generation plants and energy infrastructure if he is unable to strike a deal with the country’s new leadership.
Trump added that America’s core strategic objectives were “nearing completion.”
The SPDR S&P 500 ETF is down about 1.5% as of 7:26 a.m. ET. WTI futures, which had been trading around $98 per barrel ahead of the speech, broke above $109.
The ongoing war threatens to bring about an even more pronounced disruption to energy supplies, with negative ramifications for economic activity and financial markets. The flow of oil through the Strait of Hormuz, a key choke point for energy shipments, has slowed to a trickle. The president said that countries that rely on this waterway for oil should either get this commodity from the US or take the lead in ensuring the security of shipments through the strait, reiterating sentiments he previously expressed on Truth Social.
“This amounts to handing control of at least US oil and gasoline prices to other countries and not least Iran, in an election year giving these actors a likely direct sway over the President’s political fortunes,” wrote 22V Research analyst Jacob Funk Kirkegaard. “The most, perhaps only, genuinely encouraging element of the President’s speech was his complete lack of any mentioning of ground troops, hereby evidently foregoing a prime opportunity to prepare the American electorate for such a decision, surely multiplying the political costs for himself were he to nonetheless order any type of ground assault in the coming weeks.”
Though the thrust of these remarks was largely in line with what had been reported ahead of the speech, traders had been growing more optimistic about the prospect of an imminent wind-down to the kinetic conflict. The S&P 500 closed higher Wednesday, marking its best two-day stretch of gains since last May.
