Markets cheer as Trump threatens to abandon Strait of Hormuz, leaving oil market in turmoil | Good luck

The S&P 500 rose more than 1.5%, while the Nasdaq rose nearly 2%.

In one night, a Wall Street Journal the report indicated that President Trump would be ready to go to war with Iran; in the morning, he was telling the companions that they should “have slow courage, go to the Strait, and just GET IT.”

“You’re going to have to start learning to fight back, the USA will no longer be there to help you, just like you weren’t there for us,” Trump wrote on his social media platform, Truth Social.

Meanwhile, the average price of gas in the US crossed $ 4 a gallon on Tuesday, more than a dollar from $ 2.98 on February 27, the day before the war began. It is the first time gas prices have crossed the $4 mark since 2022, when Russia’s invasion of Ukraine caused an energy crisis. At the same time, Trump’s approval rating is tanking; according to Nate Silver, he now has an approval rating of -16.7, a record low for his second term.

Throughout the war, the White House has relayed its messages to the stock market, which is struggling to hold on to its year-long rally, even as consumer spending continues to rise. And while Americans are facing pain at the pump, Southeast Asia is facing fuel shortages that are forcing people to work from home or wear short sleeves to conserve air.

As Trump continues to improve the American market, he is reinforcing an “America-first” business model, where investors win while other countries bear the cost. Recently, the Gulf allies of the US have asked Trump to continue the war until the Iranian government is completely paralyzed, and they cannot support their proxies or continue to hold the Strait as a point of power. Jamie Dimon commented on this during an interview with Brian Kilmeade on Fox News Tuesday morning, saying “it’s more important that this is completed successfully than what the market is doing.”

“We all have to hope that these people are bad, that we will overcome this thing and clean up the problems and that Iran is no longer a threat to everyone,” Dimon said.

However, the White House, on several levels, has tried to undermine the expectations of the Strait of Hormuz. White House Press Secretary Karoline Leavitt confirmed on Monday that reopening the Strait of Hormuz is not one of the “primary goals” that Trump has set for the military campaign, and Defense Secretary Pete Hegseth confirmed the message on Tuesday morning to a very friendly Pentagon presser, listing the destruction of Iran’s missiles, drones, and naval forces as the objective of Hor.

“This issue of the Strait of Hormuz is not just a problem for the United States of America,” said Hegseth.

Leavitt added on Tuesday that once the war is over, gas prices “will drop back to what American drivers enjoyed for many years before these temporary disruptions.”

The stock market seemed to read it as a drop: if the US exits, it removes the worst of the long-term ground campaign that sends oil even more. But walking doesn’t solve the problem; Oil prices rose again on Tuesday as West Texas Intermediate settled at $103 at the time of writing, almost double where it started this year. BlackRock director Larry Fink warned this week that oil could hit $150 and cause a global recession if Iran remains a threat to Hormuz after the war ends.

The damage to the real economy is already increasing. Finally, even when the US uses its strategic resources, oil is a global commodity, and as commodity researcher Rory Johnston likes to say, “a barrel of oil lost anywhere is a barrel of oil lost everywhere.” Oxford Economics has cut its forecast for global industrial growth to 2.5% this year, warning that energy-intensive sectors such as transport, utilities and petrochemicals face strong prices and falling output. Their senior economist Nico Palesch warned in a letter on Tuesday morning of the possibility of “disruptions to the supply of goods in light of the observed Covid-19 epidemic” if the closure of the strait is not resolved.

The United Nations Development Program also warned Tuesday that the war could push 4 million people in the Middle East into poverty, and the region faces a loss of GDP of $120 billion to $194 billion. More than 3,000 people have been killed across the Middle East since the war began: 1,900 in Iran, 1,200 in Lebanon, 19 in Israel, and 13 US service members.

Meanwhile, on the other side of its mouth, the administration is increasing its threats to Iran. Trump shared a video on Social Media Monday night showing a major artillery base in Isfahan being hit by American bombs, an attack that Hegseth confirmed involved 2,000-pound bunker buster missiles. The Chairman of the Joint Chiefs added that the US has begun flying B-52 bombers over Iran, aircraft capable of carrying nuclear weapons.

On the ground, thousands of special forces units—the Navy, the Marine Guard—are in the area. Hegseth said attacks will intensify if a deal is not reached with Iran soon, with Trump himself threatening to “destroy” Iran’s power plants, oil wells and Kharg Island – and “probably all desalination plants,” which millions of people across the Middle East rely on for drinking water. Human Rights Watch said bombing them would amount to a war crime. When asked about it, the chairman of the Joint Chiefs said only that the military would conduct such a mission with “standard methods.”

Meanwhile, Iran has little incentive to negotiate. Daily shipping traffic in the strait has dropped by about 90% to 95% since the start of the war. Iran’s parliament has approved a plan to establish tariffs for passing ships, to organize its control over the chokepoint, which is already reaping the benefits: Iran is getting more money than before the war. With these kinds of incentives to keep it closed, Tehran may not be in a position to negotiate.

No other country has ever stood up to take responsibility for opening the Strait. Trump lashed out at the United States’ allies, particularly France, which he said were “NOT HELPFUL” as they barred Israeli refueling planes from flying over their airspace. “USA WILL REMEMBER!!”