Global Markets See Whiplash as Trump Postpones Iran Energy Strikes

Key Takeaways

• US stocks moved higher on Monday as investors digested the latest developments out of the Middle East.
• US President Donald Trump said he would postpone planned attacks on Iranian energy infrastructure, withdrawing from an earlier ultimatum set for late Monday.
• Benchmark brent crude oil prices dropped 10.5%.

US stocks moved higher on Monday as global markets rebounded and oil prices dropped,after US President Donald Trump said he was postponing attacks on Iran’s energy infrastructure following “productive” talks on ending the war.

The Morningstar US Market Index gained 1.18% on Monday, while the S&P 500 added 1.15% and the tech-heavy Nasdaq 100 climbed 1.38%. Bank, tech, and industrial stocks led gains alongside airlines, while energy shares declined.

Trump said Monday that he would postpone planned attacks on Iranian energy infrastructure for five days, pending ongoing negotiations with Tehran.Iran has denied the talks took place, according to the country’s state-affiliated Tasnim News Agency.

Despite the conflicting statements, brent crude oil futures fell 11% to $99.94 per barrel, while West Texas Intermediate futures fell 10% to $88.13.

European markets also rebounded sharply, following declines of as much as 2% earlier in the session.

Trump had previously issued a 48-hour ultimatum on Saturday, warning that he would “obliterate” Iran’s power plants if Tehran did not fully reopen the Strait of Hormuz by late Monday. Iran responded that they would not back down and threatened to target energy infrastructure and desalination facilities across the Persian Gulf.

Asian markets sold off in Monday’s session, led by declines for South Korea’s KOSPI, which closed 6% lower prior to Trump’s post. “An escalation in threats over the weekend has sent a further wave of depression through markets this morning, with everything from stocks to gold declining,” said Morningstar chief European markets strategist Michael Field.

Markets are finally starting to wake up to the gravity of the potential for long-term impact on energy markets.

Neil Wilson, Saxo Bank

The head of the International Energy Agency said Monday that the Iran war has created an oil crisis worse than those of the 1970s, and that it poses a major threat to the global economy.

Goldman Sachs raised its oil forecast, warning on Friday that the global Brent benchmark could exceed its all-time high of $147 per barrel (set in 2008) if supply disruptions through the Strait of Hormuz are prolonged.