Oil spikes, stocks retreat as Hormuz closure rattles markets
London — Oil prices surged while global equity futures slipped and the U.S. dollar strengthened on Monday after renewed tensions in the Iran conflict and reports that the Strait of Hormuz had been closed again, reversing market optimism seen late last week.
Brent crude futures rose about 7% in early Asian trading to $96.85 a barrel, while S&P 500 futures fell roughly 0.9%, reflecting a shift toward risk aversion among investors. Currency markets also reacted, with the euro easing 0.3% to $1.1735 and the Japanese yen weakening about 0.2% to 158.95 per dollar.
The moves followed conflicting signals on diplomacy after Iran rejected new peace talks with the United States, according to state media, hours after U.S. President Donald Trump said Washington would pursue negotiations while warning of further military action if Tehran refused its terms.
Market sentiment was further pressured by rising tensions at sea after the United States said it had seized an Iranian cargo vessel attempting to breach its blockade, adding to uncertainty around energy supply routes.
The renewed closure of the Strait of Hormuz a key transit corridor for global oil and gas shipments — reversed sharp gains in equities and bonds recorded on Friday, when Iran’s brief reopening of the passage had fueled hopes of de-escalation and sent oil prices lower.
Analysts said markets are recalibrating expectations after what some viewed as an overly optimistic rally. Michael Brown, senior research strategist at Pepperstone, said investors were unwinding positions as geopolitical risks resurfaced, though underlying expectations of continued dialogue between the two sides remain a moderating factor.
“If it is confirmed that talks will not proceed, markets could shift more decisively into risk-off mode,” Brown said, noting that much of Friday’s bond rally could reverse under sustained uncertainty.Global equities had rallied last week, with Wall Street indexes reaching record highs, supported by easing oil prices and expectations of strong corporate earnings.
Bond yields also declined, with the benchmark U.S. 10-year Treasury yield falling to its lowest level since mid-March.The U.S. dollar, which had weakened in recent sessions as safe-haven demand eased, edged higher on Monday, with the dollar index up around 0.2% in early trading.
Analysts cautioned that recent market moves suggest heightened volatility ahead. Marc Chandler of Bannockburn Capital Markets noted that the Nasdaq’s extended rally and the dollar’s recent declines indicated markets may have been pricing in a more optimistic scenario than current geopolitical conditions support.
Investors are now closely monitoring developments in the Iran conflict and any signals on diplomatic engagement, as well as upcoming corporate earnings, for direction in global markets.
