The price of oil jumped and stocks fell slightly Monday as traders digested renewed tensions between the U.S. and Iran over the critical Strait of Hormuz.
Subscribe to read this story ad-free
Get unlimited access to ad-free articles and exclusive content.
U.S. crude oil jumped more than 4%, to about $85 per barrel, and international Brent crude oil rose 3%, to around $93 per barrel.
In early trading, the S&P 500 fell slightly by about 0.3%, the Nasdaq Composite fell 0.5%, and the Dow Jones Industrial Average traded flat. The Russell 2000 index fell 0.2%.
Wholesale gas prices also rose by more than 3% and heating oil futures, which are a proxy for jet fuel prices, spiked 4%.
The moves add to weeks of dramatic ups and downs, as investors try to strategize amid the almost daily swings between war and peace. While major U.S. stock indexes had recently recovered all the losses they incurred since the war began, oil prices have remained elevated, costing consumers more at the gas pump and pushing inflation higher.
On Monday morning, fresh comments from a senior Iranian official to Reuters led to stocks opening higher than futures had indicated overnight. That official said Iran was “positively” reviewing possible participation in peace talks with the U.S.
But markets also remain focused on the Strait of Hormuz, the crucial waterway off Iran through which more than 20% of the world’s oil supply typically passes.
Iran declared the strait open for commercial vessels Friday — which sent oil prices plummeting 11% — but then walked back the statement over the weekend as it accused the U.S. of only “partially implementing the ceasefire.”
When Iran announced the strait was closed again, dozens of commercial ships that tried to exit the strait turned back, and remained trapped Monday.
“Markets are trading in a world where there is plenty of spin, statements, and speculation, but very little information of substance,” wrote UBS Global Wealth Management chief economist Paul Donovan in a Monday morning note.
Trump’s statements on Friday had “triggered a wave of optimism in markets,” he wrote. “Events over the weekend have reversed some of that optimism.”
Shipping giant CMA CGM said one of its ships had come under fire Saturday. “CMA CGM confirms that one of its vessels was the subject of warning shots yesterday,” a spokesperson told NBC News on Sunday. “The crew is safe and unharmed.”
President Donald Trump also said Iran had attacked ships.
“Iran decided to fire bullets yesterday in the Strait of Hormuz — A Total Violation of our Ceasefire Agreement,” Trump wrote Sunday morning on Truth Social. “Many of them were aimed at a French Ship, and a Freighter from the United Kingdom.”
Escalating tensions even further, Trump later said the U.S. military had “blown a hole” in the engine room of an Iranian ship that “tried to get past our Naval Blockade.”
“Right now, U.S. Marines have custody of the vessel,” he said.
U.S. Central Command published video of shots being fired at the vessel from a U.S. Navy guided missile destroyer and added that Marines have boarded the vessel.
“Iran will soon respond to this act of armed piracy and theft by the America military and will retaliate,” a spokesperson for Iran’s armed forces said on state TV.
No commercial ships were recorded crossing the strait Sunday as the latest developments played out, according to data from the maritime tracking firm Kpler. On Monday morning, just three ships were recorded crossing the waterway, a fraction of the hundreds of ships per day that would typically cross before the war.
Traders were also closely watching the status of peace talks between the U.S. and Iran, which Trump said Sunday morning were set to take place in Islamabad.
“My Representatives are going to Islamabad, Pakistan — They will be there tomorrow evening, for Negotiations,” he said.
Chris Turner, global head of markets at ING, wrote that Monday’s “benchmark of any progress will probably be whether Iran sends any negotiators to peace talks.”
