Markets sell off as U.S.-Iran ceasefire plans go nowhere, leaving Trump with military options to reopen the Strait of Hormuz
The decline in hopes of reaching a peace agreement with Iran on Sunday increases the risk of a continuation of the global energy crisis and forces the United States to focus on military operations to reopen the Strait of Hormuz.
Futures tied to the Dow Jones industrial average fell 200 points, or 0.40%. S&P 500 futures lost 0.33% and Nasdaq futures lost 0.28%.
US oil futures rose 2.7% to $97.97 per barrel, while Brent crude rose 2.7% to $104.01. Gold decreased by 0.76 percent to $4,695 per ounce.
The US dollar increased by 0.2% against the euro and 0.14% against the yen. The yield on the 10-year Treasury note remained steady at 4.36 percent.
On Sunday, Iran responded to a US ceasefire offer, saying negotiations should focus on the following issues: permanently end the war on all frontsIncluding Lebanon.
Sources also told Wall Street Magazine Iran has proposed gradually reopening the strait as the United States lifts its naval blockade.
The report stated that nuclear issues would be discussed in a 30-day window, but Tehran rejected demands to dismantle its nuclear facilities and suspend uranium enrichment for 20 years. Iran also demanded the release of its frozen funds abroad.
Trump soon called Iran’s response “completely unacceptable,” without pointing to any specific offer. He had previously accused Tehran of “playing games” with the US for nearly 50 years, but added: “They won’t laugh anymore!”
Analysts noted that Iran’s stance has changed little, stating that the leadership believes it has the upper hand and does not want to compromise.
If the Strait of Hormuz is not opened as soon as possible, global oil stocks will soon reach critical levels and cause an increase in prices.
Last week, Trump tried to break the impasse by announcing a military effort to remove commercial ships from the Persian Gulf. A few ships managed to pass through the strait as US destroyers fought off Iranian attacks. But less than two days later, he paused the Freedom Project.
Earlier Sunday, Energy Minister Chris Wright he told CBS News Face the Nation He said the US “stopped the Freedom Project at Iran’s request.”
“If we open the strait militarily, which is a challenge, it’s not a one-day or two-day effort, it’s an effort, they said, ‘Wait a minute, let’s make a deal. Let’s make a deal, let’s agree on reopening. Let’s enter into talks on the nuclear program, let’s make a deal.'”
The purpose of the Freedom Project pause was to reach an agreement with Iran, but “if it becomes clear in the next few days that there is no good path to a negotiated solution, we will return to the military method of opening the strait,” Wright warned.
This story first appeared on: Fortune.com
