President Donald Trump issued a sharp warning to Iran on Sunday, stating on Truth Social that "the Clock is Ticking" and urging the country to "get moving, FAST." The message, which warned "there won't be anything left" without quick action, immediately drove oil prices up more than 1% as traders braced for fresh supply disruptions in the Middle East.
Energy supply chokepoints
The escalation comes as the Strait of Hormuz remains closed, a bottleneck that some estimates suggest is keeping 100 million barrels of oil a week off the global market. While U.S. output has been a point of focus, PGIM's Daleep Singh noted that the Permian Basin can only likely add 250,000 barrels per day in additional production, which covers only a small fraction of the current shortfall. International benchmark Brent crude climbed to $110.72 per barrel following Trump's comments.
Market fallout. The persistent energy spike is fueling fears of a "structurally higher" inflation environment. Annual inflation reached 3.8% in April, and the bond market is reacting. The yield on the 10-year Treasury note rose nearly 24 basis points last week to end Friday near 4.6% as investors sold off long-term government debt in anticipation of potential rate hikes.
- U.S. West Texas Intermediate futures for June rose 1.75% to $107.26 per barrel.
- The Dow Jones Industrial Average fell 537.29 points on Friday as Treasury yields surged.
- Asian markets signaled a mixed open, with the Hang Seng index futures trading lower.
The geopolitical tension is casting a shadow over a massive week for corporate earnings. Nvidia and Walmart are both scheduled to report results, serving as barometers for artificial intelligence demand and consumer resilience against high gas prices. Nvidia results land Wednesday evening.
