'Trump has backed himself into a corner': how markets reacted to the US ultimatum to Iran

Oil prices rose and stocks fell after the weekend, during which US President Donald Trump gave Iran an ultimatum to unblock the Strait of Hormuz. But the initial reaction quickly fizzled out, with stock indices nearly offsetting the decline and oil prices reversing downward, reflecting investor uncertainty about how to assess further risks of conflict.

- At the beginning of trading, Brent crude oil with delivery in May rose by more than 1%, exceeding $113. At the time of publication, it was cheaper by 0.9% and cost $111.2.

- Futures on S&P 500 and Dow Jones indices fell by 0.6% in early trading, Nasdaq 100 - by 0.8%. At the time of publication, the Dow Jones almost offset the fall, while the other indices were down less than 0.3%.

On the evening of March 21 (New York), Trump demanded that Iran unblock the Strait of Hormuz, a key Middle East export route through which about 20% of the world's oil and LNG normally passes, within 48 hours. Traffic through the strait has been effectively paralyzed since the war began on Feb. 28. As a result, benchmark Brent crude has risen in price by more than 50% since then.

Trump said the US would bomb Iranian power plants if they refused to meet his demands. In response, Tehran warned that it would then attack "the entire energy, information technology and desalination infrastructure" of the US and Israel in the region.

One of the issues that has increasingly worried investors since the war began, in addition to war fatigue and extreme volatility, is Trump's lack of a consistent position, Bloomberg writes. Just a day before his ultimatum, the president said the U.S. was getting closer to achieving its goals in the campaign and was "considering winding down" the operation.

"By setting a 48-hour deadline, Trump has backed himself into a corner," oil market expert and Commodity Context Corp founder Rory Johnston told the agency. - It seems highly unlikely that Tehran would agree to Trump's terms on such short notice under threat of attack. And Iran is clearly able and willing to respond to any escalation."

"The sharp escalation in rhetoric is likely to lead to further risk aversion at market openings as investors find it increasingly difficult to ignore the prospect of long-term disruptions to global energy supplies," ANZ Group strategists wrote in a note to clients cited by Bloomberg.

This article was AI-translated and verified by a human editor