Stocks Drop Over 600 Points as Trump Vows Continued Iran Strikes, Oil Prices Surge

U.S. stock markets plunged sharply on Thursday following President Donald Trump’s address on the ongoing conflict with Iran, which offered no clear end to hostilities or plan to reopen the Strait of Hormuz. The Dow Jones Industrial Average fell 630 points, or 1.4%, while the S&P 500 dropped 97 points, or 1.5%. The tech-heavy Nasdaq slid 2.1%, and the Russell 2000 index, tracking smaller companies, declined 1.6%. Markets will be closed Friday for Good Friday.

Oil prices surged dramatically in response to the president’s remarks. Brent crude, the international benchmark, rose 8.1% to $109.35 per barrel, while U.S. crude jumped 12.9% to $113.03 per barrel. Heating oil and natural gas prices also increased. The national average price for a gallon of unleaded gasoline reached $4.08 on Thursday, up from $2.98 before the conflict began on February 28.

During his address Wednesday night, Trump reiterated that U.S. military objectives against Iran were “nearly met” and that Iran’s offensive capabilities were “essentially decimated.” However, he pledged to continue “extremely hard” strikes over the next two to three weeks and emphasized the war would continue until objectives were “fully achieved.” He did not provide a structured path to a ceasefire or a plan to reopen the Strait of Hormuz, stating only that “the strait will open up naturally.”

The Strait of Hormuz is a critical chokepoint, normally handling about 20% of the world’s oil and liquefied natural gas supply. Its closure has significant economic implications. Oxford Economics’ global chief economist Ryan Sweet noted the strait could remain closed through the end of April, increasing economic strain. The U.S. has released oil from its Strategic Petroleum Reserves to offset supply reductions, but this measure will lose effectiveness if the closure persists.

Economists warn of further price spikes. Nobel laureate Paul Krugman told CBS News that oil prices could reach $150 to $200 per barrel under current conditions. Bernard Yaros, lead U.S. economist at Oxford Economics, said U.S. gasoline prices would likely continue climbing above $4 per gallon if the strait remains closed. Drivers have already spent an additional $8.4 billion in gas costs since the conflict began, according to Democrats on the Joint Economic Committee.

The market reaction reflects increased uncertainty. Nigel Green of deVere Group said, “Markets were beginning to price in more certainty, but this speech reintroduces more ambiguity.” UBS Global Wealth Management CIO Paul Donovan warned that U.S. escalation risks provoking an Iranian response, potentially causing more damage in the Gulf region.

In diplomatic developments, British Foreign Secretary Yvette Cooper hosted a video call with 35 nations, including Gulf states, to discuss reopening the Strait of Hormuz. The United States did not participate in this meeting. Cooper indicated that easing the conflict would be necessary before deploying collective defensive military capabilities.

The surge in energy prices has also affected bond markets and inflation expectations. U.S. government bonds fell, pushing the 10-year Treasury yield to around 4.37%, influencing consumer mortgage rates, which currently average 6.45% for a 30-year fixed mortgage, up from 5.99% before the war. Bank of America analysts predict headline inflation, measured by the Fed’s preferred PCE index, will “surge imminently” and peak near 4% this quarter, up from 2.8% in January. Inflation is also rising overseas, with Eurozone inflation jumping to 2.5% in March from 1.9% in February.

Thursday’s trading session marks the final day of the week for equities and futures, as U.S. markets will be closed on Good Friday. Historically, geopolitical unrest combined with an approaching long weekend can increase selling pressure as investors seek to avoid risks during market closures.