Oil prices rose on Tuesday and stock futures fell ahead of President Trump’s 8 p.m. EST deadline for Iran to reopen the Strait of Hormuz to avoid sweeping airstrikes on infrastructure targets, including power plants and bridges.
S&P 500 futures sank 0.5%, while Dow Jones Industrial Average futures pointed to a decline of 0.4%. Nasdaq futures dropped 0.6%.
Brent crude, the international oil benchmark, rose 1% to $110.81 per barrel, while West Texas Intermediate, the U.S. benchmark, jumped 2.9% to $115.70.
Surging oil costs have driven up U.S. gasoline prices to their highest level since 2022. The average national price in the U.S. for a gallon of regular gas climbed on Tuesday to $4.14, up from $2.98 just before the outbreak of hostilities, according to data from AAA.
The stock market has gyrated for weeks amid uncertainty over the war in the Middle East, which has strangled the global flow of oil and liquified natural gas, with the Strait of Hormuz remaining effectively shut to oil tankers. Oil prices have climbed more than 50% since the war began at the end of February, prompting economists to warn of rising inflation risks.
The reaction on Tuesday from investors is relatively muted given the economic risks that could be in store if the war escalates, said Nigel Green, the CEO of investment firm de Vere Group.
“Markets are behaving as if this is background noise,” Green said in an email. “A fixed, public deadline from the U.S. president creates a binary outcome within hours — either de-escalation or direct strikes on Iranian infrastructure.”
He added, “This is a potentially huge market event like no other. It’s a known unknown with a clock.”
Analysts with Mizuho Bank noted that Mr. Trump’s latest actions mark “an escalation cycle that has now been extended several times since his first ultimatum in late March.”
“Given the differing perspectives, hopes of a complete resolution to the conflict remain elusive while countries continue to work on bilateral solutions,” they said.