The truce between Iran and the U.S. that has been fraying over the last four weeks finally showed its first real tears on Monday.
That’s when the shooting started. Central Command Chief Admiral Brad Cooper said the U.S. shot down Iranian drones and missiles while also destroying seven Iranian fast boats.
And for the first time in weeks, markets took the uncertainty as a warning. The Dow shed nearly 560 points, or 1.1%. Brent crude surged nearly 6% to settle above $114 a barrel; WTI rose more than 4% to close above $106, and the VIX spiked again.
Iran has said it won’t reopen the strait until the U.S. lifts its naval blockade on Iranian ports—something the U.S. has shown no signs of doing.
Traders on prediction market Kalshi now give only a 56% chance that traffic returns to normal by August, a month after the last consensus bet.
“We don’t anticipate the war being resolved quickly,” Jay Hatfield, founder and CEO at Infrastructure Capital Advisors, told CNBC. “We don’t think Iran is going to have an epiphany and get rid of their nuclear capabilities, and so that’s probably going to have to happen by force, and that’s not going to be well received by the market.”
