U.S. stocks experienced a significant increase on Monday afternoon, alongside a rise in oil prices, following President Trump’s suggestion of a potential resolution to the Iran conflict. This came despite ongoing tensions, as the crucial Strait of Hormuz remains blocked and Iran launched an attack on Israel’s main oil refinery.
By early afternoon, the Dow Jones Industrial Average had climbed 228 points, or 0.5%, bouncing back from a tough week. The S&P 500 saw a slight increase of 0.1%, while the Nasdaq slipped by 0.1%.
Brent crude oil prices dipped 0.4% to $112.10 a barrel after peaking at $115 earlier in the day. Traders are still wary about the damage to energy infrastructure in the Middle East. Meanwhile, West Texas Intermediate crude saw a notable rise of 3.3%, reaching $102.97.
The national average gas price hit $3.99, marking the highest level since 2022, as reported by AAA.
In a statement on Monday, President Trump indicated that a deal could be “probably” reached to bring an end to the conflict, which has been ongoing for five weeks since U.S. and Israeli airstrikes began on February 28. This optimism contributed to the Dow’s recovery from its recent downturn.
However, within the same post on Truth Social, Trump warned of potential destruction to Iran’s power plants, oil wells, and the Kharg Island energy hub if the Strait of Hormuz is not reopened within a week, which holds significance for 20% of the world’s oil supply.
Compounding these tensions, Iran attacked Israel’s largest oil refinery, while its Houthi allies targeted water facilities and power plants in Kuwait. This escalation has raised concerns about persistent high energy prices, even if the conflict resolves quickly, as repairs to damaged infrastructure will take substantial time.
When asked about his thoughts regarding the airstrike, Trump said simply, “We’ll see soon enough.”
Kenin Spivak, CEO of SMI Group, noted that “the Dow Jones Industrial Average is reacting in near real time to every tiny development perceived in the potential end of the Iran war.” He contrasted this with oil prices, which he believes are more closely tied to events surrounding the Strait of Hormuz.
Brent crude has surged over 55% so far this March, marking its largest monthly increase. Experts caution that fixing intricate energy infrastructure will require a considerable amount of time.
Earlier this month, Israel conducted an airstrike on Iran’s South Pars gas field. In retaliation, Iran targeted energy facilities in Qatar and Saudi Arabia and intensified attacks on vessels in the Persian Gulf.
The Strait of Hormuz, an essential route for not just oil but also fertilizers and metals, remains shut. Additionally, there are worries that the Houthis might obstruct access to the Bab el-Mandeb Strait, critical for passage between the Arabian Peninsula and the Horn of Africa.
“Oil prices have been skyrocketing recently,” Jeff Krimmel, founder of Krimmel Strategy Group, observed. He pointed out that there’s a noticeable tension in traders’ responses to Trump’s statements compared to actual conditions on the ground in Iran.
Krimmel added that for oil prices to stabilize, both U.S. and Iranian officials will need to acknowledge that traffic through the Strait of Hormuz must increase significantly and that peace talks are making progress.
In a prior Financial Times interview, Trump expressed a desire to “take the oil” from Iran, likening it to the U.S. control of Venezuelan oil exports following the arrest of dictator Nicolás Maduro.
“Honestly, what I like best is to get oil in Iran, but some stupid people back in the United States say, ‘Why would you do that?’ But they’re stupid people,” Trump stated.
