Oil jumps, stocks fall, as Trump presses into a widening Middle East conflict
WASHINGTON— The United States further deepened the conflict with Iran on Tuesday as a new round of attacks raised fears of a widening war in the Middle East, rattling markets and soaring oil prices and prompting urgent calls from European leaders for a forward-looking plan.
President Trump acknowledged in his Oval Office speech that the public will feel some economic pain as war continues to threaten regions critical to the world’s oil and natural gas production.
“As soon as this is over, these prices will be down, lower than they’ve ever been, I believe,” Trump said, but did not give a clear time frame for when the conflict might end.
As the war entered its fourth day on Tuesday, Israel struck Iran’s missile launch sites and weapons factories, and Iran retaliated in the Persian Gulf region, including attacks on US diplomatic headquarters in Saudi Arabia, Kuwait and Dubai.
The conflict simultaneously sparked alarm in global markets, causing stocks in Europe and Asia to tumble and the S&P 500 to fall almost 1% after falling as much as 2.5% in early trading.
European governments also had to struggle with this negativity; some countries have increased their military presence in the region; because the actions of these countries are being closely monitored by Trump, who has so far clearly singled out countries he sees as helpful in the war effort.
“Spain sucks,” Trump told reporters in the Oval Office, before threatening to “cut off all trade with Spain” after he said the country denied American forces access to its military bases.
Trump said he was “not happy with England either” and complained about not being allowed to use the military base in Diego Garcia in the Chagos Islands. Trump said that without access to this military base, American planes were forced to fly “extra hours.”
“We are very surprised. The person we are dealing with is not Winston Churchill,” Trump said. Churchill served as Britain’s prime minister during World War II.
Trump sat next to German Chancellor Friedrich Merz as he threatened his European allies, underscoring the alarming landscape for world leaders as American and Israeli forces seek to destroy Iran’s missile capabilities and nuclear program and consider a possible change in government.
During the meeting, Trump said Germany allowed the United States to use its air bases. Beyond that aid, Trump said, “We’re not asking them to put their boots on the ground or anything like that.”
When asked by reporters how Germany planned to assist in the conflict, Merz said he wanted to focus on talking to Trump about the “day after” the war ended.
“We are on the same page about eliminating this terrible regime in Iran, and the next day we will talk about what will happen if they leave,” Merz said.
Trump talked about regime change options
Trump didn’t yet have much to say about what would happen next, and he was vague about who would run Iran’s government; He said U.S. and Israeli military operations were killing people he thought could fill the leadership void.
“Most of the people in our minds are dead,” Trump said. “We have another group now, but according to reports they might be dead too, so I guess there’s a third way coming and pretty soon we won’t know anyone.”
His remarks were a surprising admission in part because he had said minutes earlier that the worst-case scenario in his mind was that a military operation would take place and “then someone who is as bad as the last person will take over.”
“This could happen,” Trump said.
Asked if Crown Prince Reza Pahlavi, the former shah’s son, was someone he would want to lead the country, Trump said he was a “very nice person” but said he wasn’t sure if he was his choice.
The president and his top aides have given varying explanations when asked about regime change, drawing criticism from Democrats and some conservatives who want to know why Americans are being dragged into a war with no clear end in sight.
On Saturday, when US and Israeli forces struck Iran for the first time, Trump said that overthrowing Iran’s theocratic regime was part of the logic. However, on Monday, he emphasized that Iran’s missiles pose a threat to the United States, so the attack was carried out to eliminate Iran’s missile capability and nuclear program.
After briefing lawmakers Monday afternoon, Secretary of State Marco Rubio told reporters that the United States launched a “preemptive” strike on Iran because officials knew Israel would hit the country. Rubio said this would put US forces at risk and lead to more US deaths. As of Tuesday, six American soldiers had been killed in combat.
“Israel was determined to act in its own defense, with or without American support,” House Speaker Mike Johnson (R-La.) said Monday afternoon after being briefed by Trump administration officials.
“If Israel had opened fire on Iran and taken action against Iran to eliminate the missiles, then they would have immediately retaliated against US personnel and assets,” Johnson told reporters.
Trump disputed the claim that Israel’s plans to attack Iran led him to attack and said the situation was exactly the opposite.
“If that had happened, I could have forced Israel’s hand,” Trump said Tuesday. “But Israel was ready, we were ready, and we made a very, very strong impact because almost everything they had was destroyed.”
But it was unclear how far the U.S. military had progressed in fulfilling its mission.
In a letter I wrote on Monday Trump told Congress that “while the United States desires a swift and lasting peace, it is not possible at this time to know the full scope and duration of military operations that may be required.”
Senate Minority Leader Chuck Schumer (D-New York) warned on the Senate floor that the administration’s dark strategy is not good for the country.
Schumer said, “History teaches us a simple lesson: Wars without a clear goal do not stay small. They get bigger, bloodier, longer, and more expensive.” “This is not a war of defence. This is not a war of necessity. This is a war of choice.”
Recent attacks on the region
Tuesday saw the war expand once again as Israeli troops attacked Lebanon in an attempt to dislodge the Iran-backed Shiite militant group Hezbollah.
The ground attack came a day after Hezbollah launched rockets and drones at an Israeli military post across the border; The group said this attack was revenge for the killing of Iran’s Supreme Leader Ayatollah Ali Khamenei and a response to Israel’s almost daily violations of the US-brokered ceasefire in November 2024.
The attack sparked a major Israeli assault on dozens of villages and towns in southern Lebanon, as well as the southern suburbs of Lebanon’s capital, Beirut. According to Lebanese officials, 40 people died in the attacks, 246 people were injured, and tens of thousands of people were forced to flee their homes and take shelter in Beirut and other places.
Israeli troops withdrew from positions in southern Lebanon ahead of a ground offensive, the Lebanese army said on Tuesday. The Israeli army’s Arabic-speaking spokesman later issued a warning to residents of some 80 towns and villages in the area to “immediately evacuate your homes” and head north.
Meanwhile, Hezbollah maintained its defiant stance and continued rocket and drone attacks on Israel.
“The period of patience is over and we have no choice but to return to resistance,” said Mahmoud Katari, who heads Hezbollah’s Political Council. “If Israel wants open war, so be it.”
The occupation comes more than a year after Israel occupied parts of southern Lebanon in 2024. After the ceasefire came into force, Israel withdrew from most of the country except for five positions near the border. But the ceasefire has proven to be more conceptual for Lebanon, with Israeli warplanes and troops committing more than 10,000 ceasefire violations in the 15 months since the ceasefire was signed, according to the UN.
Israel says its actions are to prevent Hezbollah from reestablishing itself near the border, but the result means residents of border towns and villages in southern Lebanon are unable to return to their homes.
Israel’s military spokeswoman, Brigadier General Effie Defrin, said in a statement that the troops “created a buffer” in Lebanon between the residents of northern Israel and any threats.
Rubio said that as the conflict escalated, approximately 1,600 Americans stranded in the region requested assistance and the Trump administration was trying to help evacuate them. However, this effort ran into difficulties as Iranian missiles hit many airports in the Middle East.
“We know we can help them,” Rubio said. “It will take some time because we cannot control the closure of the airspace.”
Ceballos reported from Washington and Bulos from Khartoum, Sudan.
