President Donald Trump told reporters that the ceasefire between the United States and Iran has now ended. “I don’t want to deal with them anymore, they are scum.” He added. These comments shook financial markets around the world. Stocks fell, oil prices rose, and about $500 billion was wiped from US stock markets in just a few hours.
The remarks also included some unusual verbal errors on Trump’s part, such as referring to Iran as the “Islamic Republic of Japan” while discussing an attack on a US aircraft carrier using 11 missiles. President Trump said during the NATO summit that they likely will Iran struck again tonight.
last week, Positive news came from the US-Iranian talks. Indirect talks between Iranian and American negotiators and Qatari and Pakistani mediators in the Qatari capital, Doha, concluded with positive progress. But today, all this progress seems to be in vain.
What Trump actually said about Iran’s infrastructure
The most important element of the comments to the markets was not the part about the ceasefire; It was “what the United States can do next.”
“The US military could destroy all of Iran’s bridges, disable its electrical grid, and destroy its desalination plants in one day.” Trump warned. “I can say that we are capable of demolishing every bridge in Iran in one day.” He said.
He also talked about Kharg Island, Iran’s main oil export port. The US hit it the night before and said they had destroyed part of it, and they might end up taking control of the whole thing.
The vast majority of crude oil exports from Iran pass through Kharg Island. This disruption will quickly take a huge amount of oil out of the global supply chain.
How did markets respond to news of the escalation between the United States and Iran?
This was met with a quick and widespread reaction. The price of crude oil rose by 5%, testing the $75 resistance level. The price action shows that if it can close above the $72 price point, we could see it test $78 in the short term.
The S&P 500 fell 1%, the Nasdaq 100 fell 1.5%, and the Dow lost 1.3%. The 1-hour chart of the S&P 500 is indicating a strong sell-off mid-session, as it is down to 7437 currently, with a low of 7429.
Gold also fell by 2.5% from $4,100 to $4,030. Crypto assets also followed stocks. Data from CoinGlass shows that over the past 24 hours, 137,023 traders were liquidated, for a total of more than $385 million liquidation.
Bitcoin retreated from the $64,000 resistance level after that An oil tanker was attacked in Hormuz Strait on Tuesday. The next point of interest for Bitcoin price is the $61,500 support. If tensions escalate we may see a new low around $59,500.
How will escalation affect oil, cryptocurrencies and stocks
The Kharg Island threat is the key that will be focused on moving forward. Once the United States decides to seize or disable Iran’s main oil export terminal, global oil supplies become limited and prices rise. If the US-Iranian escalation continues, we may see further declines in the markets.
