WASHINGTON / TEL AVIV — The Iranian Revolutionary Guard Corps declared the Strait of Hormuz closed to international shipping on Tuesday, threatening to set ablaze any vessel attempting to transit the waterway, according to Iranian state media cited by Reuters. The announcement sent shockwaves across global commodity markets and deepened a two-day selloff in U.S. equity futures.
Brent crude, the international benchmark, surged more than 8% on Tuesday to top $84 per barrel, extending Monday's 6% advance. West Texas Intermediate jumped by a similar margin to trade above $77 per barrel. Taken together, crude prices have risen more than 14% since U.S. and Israeli forces launched what the Pentagon calls Operation Epic Fury late Friday. At one point on Monday, oil briefly spiked as much as 13% in overnight trading before paring gains as investors weighed the possibility of a short-lived conflict.
The closure of the Hormuz Strait, through which approximately one-third of the world's total seaborne crude exports transit annually, represents what energy analysts are calling a worst-case scenario for global supply chains. Tanker owners have already taken precautionary measures and halted traffic through the chokepoint, according to tracking data from energy consultancy Kpler.
European natural gas futures surged more than 40% in sympathy, reflecting fears that liquefied natural gas shipments originating from Qatar — a major supplier to Europe — could also be disrupted if the conflict spreads further across the Persian Gulf region. Iran has also targeted Gulf Cooperation Council states including Bahrain and the UAE with missiles and drones, according to reports from regional officials.
On Wall Street, equity futures pointed sharply lower by Tuesday morning. Dow Jones Industrial Average futures fell approximately 707 points, or 1.45%, while S&P 500 futures declined 1.66% and Nasdaq 100 futures plunged 2.17%. The moves reverse a fragile Monday recovery in which the S&P 500 managed a marginal gain of 0.04% to close at 6,881.62 after initially tumbling by as much as 51 points. The Volatility Index climbed to 25.16, its highest level in months.
Energy stocks surged against the market tide. Exxon Mobil gained more than 4% in Monday's session, with Chevron and ConocoPhillips advancing more than 3% and 5%, respectively. Defense stocks also saw outsized gains as investors rotated into sectors seen as direct beneficiaries of escalating hostilities. Northrop Grumman rose 6%, RTX Corporation climbed 4.7%, and Lockheed Martin added 3.37%. Palantir Technologies, viewed as a critical intelligence and AI-driven warfare platform, surged nearly 6%.
Analysts warned that oil could reach $100 per barrel if the Strait closure persists. "After initially taking the Middle East war in stride on Monday, market anxiety ratcheted higher overnight amid concerns that a decapitated and leaderless Iranian government will execute a prolonged retaliatory response aimed at sowing chaos throughout the region," said Adam Crisafulli of Vital Knowledge. Gold traded near $5,317 per ounce, up roughly $40 on the session, as investors sought safe-haven exposure. The U.S. dollar index gained nearly 1%, erasing all of its year-to-date losses.