After a week when ceasefire hopes lifted sentiment and stock prices on Wall Street, the U.S. war on Iran could soon flare up again.
That would target Iranian oil shipments, which have continued flowing, while Tehran has bottled up supplies from other countries by selectively closing the strait with drone and missile attacks.
Futures tied to the Dow Jones industrial average fell 531 points, or 1.10%. S&P 500 futures were down 1.15%, and Nasdaq futures lost 1.32%.
U.S. oil futures jumped 8.63% to $104.90 a barrel, and Brent crude climbed 8.04% to $102.85. Gold fell 2.28% to $4,678 per ounce.
The U.S. dollar was up 0.49% against the euro and rose 0.32% against the yen. The yield on the 10-year Treasury was flat at 4.317%.
After the first month and a half of the war focused on aerial bombardments and missiles barrages, the next phase is poised to rely on naval forces as the U.S. follows a two-part strategy targeting Iran’s main economic lifeline as well as its control of the strait.
U.S. Central Command said the Hormuz blockade will begin on Monday at 10 am ET, and indicated it will also be selective, despite Trump’s vow that the strait should be open to everyone or no one at all.
The IRGC challenged the warships and warned them to leave. A drone was also reportedly launched at the ships, which destroyed it. On Sunday, the IRGC threatened to deliver a “strong and forceful response” to any warships that approach the Strait of Hormuz.
The failure to reopen the strait has sent oil prices skyrocketing, and Tehran’s ability to scare away tanker traffic has emerged as its main source of leverage over the U.S.
But if the Navy can create an alternate path through the strait with manageable risks from Iranian attacks, then the regime loses its most potent weapon.
