Oil Surges 10% as Trump Blockades Iran and Claims Hormuz Control
Trump announced a full Iran blockade and a 20% Hormuz shipping toll, sending oil nearly 10% higher while stocks and bonds sold off sharply.
President Trump escalated confrontation with Iran on Wednesday, announcing a total naval blockade, claiming U.S. control of the Strait of Hormuz, and imposing a 20% toll on all goods transiting the critical waterway — moves that immediately rattled global markets and drove crude oil prices sharply higher. The U.S. Navy confirmed it would enforce the blockade, and a fresh round of strikes targeted commercial ships near Iran, echoing the tensions that gripped markets in April.
WTI crude oil surged nearly 10%, settling up $6.24 at $77.64 per barrel before trimming some gains into the close. The sweeping maritime actions left traders bracing for further disruption to energy flows, and Trump signaled he would deliver a speech Thursday evening that could lay out plans for a more extended campaign. Gold fell $121 to $3,998 as the U.S. dollar dominated currency markets, with the Australian dollar the session's weakest performer.
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Adding fuel to the rate-hike fire, Federal Reserve Governor Christopher Waller completed what markets are now calling a full pivot away from his previously dovish posture. Waller warned that Tuesday's upcoming inflation data would be decisive and stated plainly that another hot core inflation reading would force the FOMC to consider tightening policy in the near term. Traders moved quickly to price in a 40% probability of a rate hike at the July 29 Fed meeting — a dramatic repricing from recent weeks.
Equity markets bore the brunt of the dual shocks. The S&P 500 fell 0.8% and the Nasdaq dropped 1.7%, with semiconductor stocks leading declines — Micron shed 4.9% and Intel tumbled nearly 7%. U.S. 2-year Treasury yields climbed 5.7 basis points to 4.26%, the highest level since February 2025, while the long end also sold off as inflation fears deepened. USD/JPY rose steadily but stalled near 162.50 amid lingering intervention risk from Japanese authorities.
The June federal budget deficit came in at $120 billion, narrower than the $138 billion consensus estimate, though the figure drew little market attention amid the geopolitical storm. With bank earnings kicking off Thursday, investors face a packed calendar that could either stabilize or intensify the day's jarring moves. Continue reading at Forexlive.
