Investors are looking past President Donald Trump’s attempts to talk oil prices down as reports signal an increasing likelihood that U.S. ground troops will be deployed to fully reopen the Strait of Hormuz.
Futures tied to the Dow Jones industrial average fell 298 points, or 0.66%. S&P 500 futures were down 0.62%, and Nasdaq futures lost 0.68%.
Rather than a full-scale invasion, any ground attacks may take the form of raids by a combination of special forces and conventional infantry, the report said.
Targets could include Kharg Island, which is the export hub for 90% of Iran’s oil, and coastal areas near the Strait of Hormuz, according to the Post.
While U.S. and Israeli airstrikes have devastated Iran’s military, Tehran has asserted itself as the de facto gatekeeper over the Strait of Hormuz by threatening drone attacks on ships. As a result, more countries are asking Iran for safe passage through the narrow waterway and even paying millions of dollars.
In addition, the Islamic Republic could wield even more control over global oil supplies as Houthi allies have now entered the war.
That was not the only sign that the Iran war is expanding. Ukraine is signing defense cooperation agreements with Saudi Arabia, the UAE and Qatar, offering its expertise in combating drones. That’s after reports said Russia is giving Iran targeting information and enhanced drones.
At the same time, diplomatic efforts aren’t showing much progress. Pakistan said the foreign ministers of Saudi Arabia, Turkey and Egypt were holding talks in Islamabad—without the U.S. or Israel. But Iran’s parliament speaker said the talks are merely cover to give the U.S. time to deploy more troops.
“The Middle East war now appears to be broadening and deepening,” Capital Alpha Partners analyst Byron Callan said in a note on Thursday. “We have 25% confidence that it’s concluded by the end of May, 45% that it’s settled in the fall of 2026, and 35% that it extends into 2027.”
Against the backdrop of the escalating war, high oil prices, and a worsening inflation outlook, a heavy slate of economic news is on the way.
On Monday, Federal Reserve Chairman Jerome Powell will speak, just weeks after the central bank kept rates steady, ahead of several other Fed officials due to make public appearances throughout the week.
On Tuesday, the S&P Case-Shiller home price index as well as the job openings and labor turnover report will come out.
On Wednesday, the ADP monthly payroll report, the Institute for Supply Management’s manufacturing index, and retail sales data are due.
And on Friday, the market will be closed for Good Friday, but the Labor Department will release its jobs report, with Wall Street expecting payrolls to rebound to a gain of 45,000 after a surprise loss of 92,000.
