US stock futures plunged Thursday morning as oil prices surged after President Trump vowed to hit Iran “extremely hard” in the coming weeks and failed to provide a timeline on when investors could see the free flow of crude through the Strait of Hormuz again.
Futures tied to the Dow Jones Industrial Average plummeted 604 points, or 1.3%, by approximately 9:00 a.m. ET, while S&P 500 and Nasdaq futures fell 1.4% and 1.8%, respectively.
Brent crude oil soared 7.7% to $108.96. West Texas Intermediate rose even higher – jumping 12% to $112.11.
In his speech Wednesday evening, Trump reiterated that the US would exit Iran in two to three weeks – but he also vowed to hit the nation “extremely hard” in the coming weeks and bomb them “back to the Stone Ages.”
He tried to sell the public on the war, urging Americans to view the conflict as an “investment” for future generations – but investors are fearful that escalated attacks could lead to more damage on key energy facilities, possibly keeping oil prices elevated even after the conflict ends.
After Israel struck Iran’s South Pars gas field, Tehran retaliated with strikes on key energy facilities in Qatar and Saudi Arabia.
Some analysts have warned that damage to Qatar’s Las Raffan natural gas plant has already sparked an “Armageddon” situation, since it will take significant time and money to repair damages and stabilize supply.
Investors are also concerned by Trump’s argument that it is up to other countries to reopen the Strait of Hormuz – a critical maritime route for 20% of the world’s oil that Iran has turned into a key chokepoint during the conflict.
“We will be helpful, but they should take the lead,” Trump said, adding that while it can be done easily, it is up to other countries more directly reliant on the oil that traverses the strait.
The Wall Street Journal earlier reported that Trump is open to leaving Iran without a peace deal to reopen the strait.
It marked a sharp reversal in major stock indexes, after the S&P 500 closed Wednesday with its biggest two-day advance since last May as investors hoped for a quick end to the war.
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