Global stock and energy markets experienced a volatile session Monday after U.S. President Donald Trump told CBS News the war with Iran is “incredibly complete, pretty much” over. These statements triggered a sharp reversal in stock and crude oil prices, which had reached highs not seen since 2022 during the day.
At the open Monday, Brent and West Texas Intermediate (WTI) crude prices surpassed $118 and $119 per barrel, respectively, driven by the near-total halt of traffic through the Strait of Hormuz. Brent, the European benchmark, rose 6.76% during the day, and WTI advanced as much as 31% in Asian trading, both reaching levels similar to those recorded after the Russian invasion of Ukraine. However, the trend reversed following the U.S. President’s remarks, with oil prices retreating to close below $100 per barrel. Brent finished at $98.96 and WTI fell to $85 after market close, according to futures market data from London and Fresh York.
Trump stated that Iran “has no navy, no communications, no air force” and that his administration is considering taking control of the Strait of Hormuz, a strategic waterway through which approximately one-fifth of the world’s oil supply passes. Prior to these statements, Iran had threatened to set ships on fire in the waterway, raising fears of a prolonged closure and further price increases.
U.S. Stock markets experienced sharp declines at the start of the session, with the S&P 500 losing as much as 1.5% and the Dow Jones Industrial Average falling nearly 900 points. Trump’s statements shifted investor sentiment, and the three major indexes reversed course to finish the day with gains: the Dow Jones rose 239 points to 47,740, the S&P 500 advanced 0.83% to 6,795, and the Nasdaq grew 1.38% to 22,695, according to preliminary data. Some of the largest gains were seen in companies like Caterpillar Inc. (+3.54%), Nvidia (+2.72%), American Express (+1.52%), and Goldman Sachs (+1.27%).
International market indexes, however, suffered significant declines before the release of the presidential comments: the South Korean Kospi fell 6%, the Japanese Nikkei 225 lost 5.2%, and the French CAC 40 declined 1%.
The increase in energy prices renewed fears of a resurgence of inflation in the United States, at a time when many families are struggling to cover their expenses. If oil prices remain elevated for a prolonged period, household budgets—already affected by inflation—could deteriorate further. Businesses would also face higher fuel and logistics costs, increasing the risk of a “stagflation” scenario, characterized by economic stagnation and high inflation.
Analyst Sameer Samana, head of equity and real asset strategies at Wells Fargo Investment Institute, stated that “the current acute oil shortage will reverse in the coming months as new supply comes to market and oil should come down significantly.”
In the bond market, the yield on the U.S. 10-year Treasury fell to 4.10% after exceeding 4.20% at the start of the day, reflecting tension between fears of inflation and concerns about a possible economic slowdown. Gold fell 0.12% to $5,152 per ounce, while silver rose 3.17% to $86.98 per ounce, according to market figures.
The evolution of the markets remains uncertain given the ongoing conflict in the Middle East. Recent fluctuations reflect investor sensitivity to political announcements and the volatility that persists due to the partial closure of the Strait of Hormuz and the possibility of further military action, according to CBS News and international agencies.
(With information from EFE, AP, Reuters and Bloomberg)
Frequently Asked Questions
What caused the initial spike in oil prices?
The initial spike in oil prices was driven by the near-total halt of traffic through the Strait of Hormuz, a key waterway for oil transport, due to the U.S.-Israeli war with Iran.
How did Donald Trump’s statements affect the markets?
Donald Trump’s statements that the war with Iran was “very complete, pretty much” over caused a sharp reversal in market trends, leading to a decline in oil prices and a recovery in stock markets.
What is “stagflation”?
Stagflation is a scenario characterized by economic stagnation and high inflation, a risk that has increased due to the recent rise in energy prices.
Given the volatility of the situation, what factors might influence the future direction of oil prices and global markets?
