Oil prices surged above $110 a barrel on Thursday following President Donald Trump's primetime address, in which he threatened to destroy Iran's infrastructure unless the Strait of Hormuz is reopened. The escalation has dampened market hopes for a swift resolution to the conflict, sending energy costs higher and triggering losses in global equity markets.
In a national address on Wednesday night, President Trump set a new ultimatum for Tehran, warning that the United States would strike Iran "extremely hard" over the coming two to three weeks if demands were not met. The President specifically threatened to target Iranian bridges and power plants, signaling a significant escalation in the ongoing military confrontation. "The US will hit Iran extremely hard," Trump stated, according to reports from multiple outlets including Bloomberg and CNBC.
The rhetoric caused immediate volatility in financial markets. U.S. equity futures fell sharply, with the S&P 500 dropping as much as 1.7% in early trading, while oil prices jumped more than 60% over the course of March. Brent crude rose above $110 a barrel, and West Texas Intermediate (WTI) briefly topped $115 before settling above the $110 mark. The surge reflects investor fears that the conflict will prolong, threatening energy flows through the Strait of Hormuz, a critical chokepoint for global oil shipments.
"The market has had the perception that President Donald Trump will quickly end the war," a CNBC report noted, adding that the President's new timeline of two to three weeks for further escalation has altered that outlook. "Oil prices are surging as the market prepares for a longer U.S. war with Iran," the network reported, highlighting that more than 600 million barrels of oil are at risk due to the disruption.
The conflict has already roiled global energy markets, with the Strait of Hormuz remaining largely closed to shipping. While an alternative route through the Red Sea had previously cushioned some of the impact, analysts warn that Houthi attacks in the Red Sea could worsen the global oil crunch. A third U.S. aircraft carrier strike group is reportedly heading to the region, suggesting further military buildup.
The President's address also drew international diplomatic responses. UK Prime Minister Keir Starmer stated that the United Kingdom would coordinate a diplomatic push to reopen the Strait of Hormuz. Meanwhile, President Trump called on nations dependent on Gulf oil to take the lead in keeping the waterway open.
Markets had shown signs of optimism earlier in the week, with oil falling below $100 and stocks rallying after reports suggested both Washington and Tehran were seeking an end to hostilities. Gold had held four-day gains on those initial reports of a potential de-escalation. However, the President's subsequent speech reversed that sentiment.
"Trump's Iran war speech paints a grim picture for oil markets," CNBC reported, noting that the timeline may not be short enough to avoid demand destruction. "Oil prices are surging as the market prepares for a longer U.S. war with Iran after President Donald Trump's national address," the network added.
The administration is also preparing new tariffs on select drug companies and an overhaul of aluminum and steel imports, adding further complexity to the economic landscape. Peter Kinsella of Union Bancaire Privée noted that the market impact surrounding President Trump's comments would likely persist as traders assess the risk of prolonged conflict.
As of Thursday morning, oil remained volatile but elevated, with traders weighing the potential for further kinetic action against Iran. The President's refusal to pivot from his aggressive stance has left investors concerned over the uncertainty of an endpoint for the conflict, which began with missile and drone attacks across the Middle East.