Oil Surges 10% as Trump Blockades Iran, Imposes Hormuz Toll
Trump announced a full Iran blockade and a 20% shipping toll on the Strait of Hormuz, sending oil soaring and stocks sharply lower.
President Trump escalated military and economic pressure on Iran Wednesday, announcing a full naval blockade and a 20% toll on all commercial goods transiting the Strait of Hormuz in exchange for U.S.-guaranteed safe passage. The White House also confirmed fresh strikes targeting Iranian commercial ships, and Trump signaled he would deliver a major address Thursday evening that could lay the groundwork for a prolonged campaign against Tehran.
WTI crude oil surged nearly 10% before trimming gains, settling up $6.24 at $77.64 per barrel — a dramatic repricing that traders quickly compared to the April flare-up in Middle East tensions. Gold fell sharply by $121 to $3,998 as investors rotated into the dollar, which led all major currencies. The S&P 500 slid 0.8% and the Nasdaq dropped 1.7%, with semiconductor names taking an outsized hit: Micron fell 4.9% and Intel shed nearly 7%.
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Adding fuel to already-jittery bond markets, Federal Reserve Governor Christopher Waller delivered hawkish remarks that represented a full retreat from his earlier dovish posture. Waller warned that another hot core inflation reading this week would compel the FOMC to "consider tightening monetary policy in the near term," and he walked back prior concerns about labor market weakness. Markets responded by pricing a 40% probability of a rate hike at the July 29 Fed meeting, and 2-year Treasury yields jumped 5.7 basis points to 4.26% — the highest level since February 2025, before the Fed's three consecutive cuts.
The confluence of geopolitical shock and hawkish Fed repricing pushed the dollar broadly higher, with USD/JPY climbing steadily before stalling near 162.50 on intervention risk. The euro reversed an early European gain to trade down 30 pips at 1.1383. With equities, FX, and bonds all finishing near session extremes, traders face a pivotal Thursday: bank earnings kick off a new earnings season, and Trump's scheduled speech could define the scope and duration of U.S. military operations in the region.
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