NEW YORK – Global financial markets turned risk-averse on Wednesday after U.S. President Donald Trump questioned the durability of the ceasefire between the United States and Iran, sending oil prices higher and equity markets lower as investors reassessed geopolitical risks in the Middle East.
Brent crude, the international benchmark for oil prices, rose 4.8% to US$77.74 per barrel, after briefly climbing above US$79 during early trading. The rebound reflected renewed concerns that tensions in the Middle East could disrupt global energy supplies, particularly through the strategically important Strait of Hormuz, one of the world’s busiest oil shipping routes.
The gains in crude prices came after Trump suggested that the temporary truce with Iran had effectively collapsed, although he indicated that diplomatic engagement would continue.
“It’s just a waste of time dealing with them,” Trump told reporters, while adding that he would still allow negotiations to proceed.
The remarks injected fresh uncertainty into global markets, which had been pricing in expectations that the ceasefire would reduce the immediate risk of supply disruptions in the Gulf.
Equity markets reacted negatively as investors shifted towards safer assets. The S&P 500 fell 0.5%, while the Dow Jones Industrial Average declined by about 550 points, or 1%. The technology-heavy Nasdaq Composite slipped 0.2%.
Market analysts said the divergence between oil and equities reflected growing concerns that renewed geopolitical instability could increase inflationary pressures while weighing on global economic growth.
Higher oil prices typically raise transportation, manufacturing and logistics costs, adding to inflation and potentially complicating monetary policy decisions by major central banks. Rising energy costs also reduce household purchasing power and can weigh on corporate earnings, particularly in energy-intensive industries.
Although Brent crude remains below the highs reached earlier during the conflict, the latest price movements highlight the sensitivity of energy markets to developments in the Middle East, which accounts for a significant share of global crude oil production and exports.
Investors are also closely monitoring shipping activity through the Strait of Hormuz, a critical maritime corridor through which roughly one-fifth of the world’s seaborne oil passes. Any disruption to traffic through the waterway could have significant implications for global energy markets, inflation and economic growth.
Financial markets have become increasingly responsive to geopolitical developments in recent weeks as investors weigh the impact of conflicts in the Middle East on commodity prices, trade flows and global supply chains.
For commodity-exporting economies, firmer oil prices may support export revenues, while oil-importing countries could face higher import bills and renewed inflationary pressures.
Market participants are expected to remain focused on diplomatic developments and any signs of further escalation, with volatility likely to persist until there is greater clarity over the trajectory of the conflict and its implications for global energy supplies.
