U.S. Stocks Surge as Trump Delays Strikes on Iran, Easing Middle East Tensions and Dropping Oil Prices

U.S. stock markets were poised for significant gains on Monday following President Donald Trump’s announcement that he would postpone military strikes on Iranian power plants for a five-day period. The decision came amid heightened tensions over the Strait of Hormuz, a critical maritime passage that carries about 20% of the world’s oil supply. Prior to the announcement, futures for the S&P 500 and Dow Jones Industrial Average had indicated an almost 1% decline, but after Trump’s statement, they reversed course, with early trading pointing to gains of approximately 1.6%. The Nasdaq futures initially surged nearly 3% before settling to similar levels as the other indexes.

The president’s announcement, made via social media, followed his earlier ultimatum that Iran reopen the Strait of Hormuz by Monday night, warning that failure to comply would result in the U.S. “obliterating” Iranian power plants. Iran responded with threats to target U.S. and Israeli energy and infrastructure assets in the region. However, Trump’s decision to delay strikes was seen by investors as a de-escalation, easing fears of an immediate military conflict that could exacerbate the ongoing global oil crisis. Oil prices, which had spiked sharply since the conflict began in late February, fell by about 5-6% following the announcement. U.S. crude dropped to around $92 per barrel, while Brent crude, the international benchmark, fell to approximately $105 per barrel.

Despite the retreat in prices, crude oil remains substantially elevated compared to pre-conflict levels, with prices up nearly 40% since the war’s onset and 60% since the start of the year. The increase in energy costs has contributed to rising gasoline prices in the United States, where the average price per gallon reached $3.96, an increase of more than $1 from the previous month, according to AAA. The economic impact of the conflict is expected to persist even if hostilities cease, as noted by Wall Street analyst Adam Crisafulli, who highlighted the precarious state of the global economy amid these developments.

Iranian state media responded to Trump’s announcement by declaring that the U.S. president had “backed down” following Iran’s firm stance. The semi-official Mehr news agency quoted the Iranian foreign ministry as stating that “there is no dialogue between Tehran and Washington,” underscoring the ongoing diplomatic impasse. Meanwhile, other markets also reacted to the news: U.S. natural gas prices declined by 4%, European natural gas futures fell 9%, and heating oil prices dropped 3%. U.S. Treasury bonds initially rose, with yields—an indicator of borrowing costs—falling after recent inflation-driven increases, though yields stabilized following the Iranian media statements.