Oil surges above $89 as Trump warns Iran will 'pay the price'

Oil prices climbed 1.4% to $89.37 a barrel Wednesday after President Donald Trump accused Iran of dragging its feet on a deal and warned the country would "pay the price." U.S. stock futures turned lower on the comments.

"Iran's Military is a complete and total mess," Trump wrote on Truth Social. "Much of it, like their Navy and Air Force, doesn't even exist anymore - They have been completely defeated. Iran is all talk and no action."

The sharp turn came a day after Trump expressed optimism that a deal could be reached in "two or three days" and said the Strait of Hormuz would reopen "immediately" after such an agreement. On Tuesday, U.S. forces launched strikes against Iran. Central Command said the strikes were "in response to yesterday's downing of a U.S. Army Apache helicopter."

West Texas Intermediate crude futures settled earlier near $88 but jumped on the news. The 1.4% gain put prices at levels not seen since early this month.

The president's latest remarks remove the near-term prospect of a diplomatic resolution that traders had been pricing in. The previous deal timeline had helped cap oil's rally, with the Strait of Hormuz chokepoint–through which about 20% of global oil passes–expected to reopen.

Now, the market faces a renewed risk premium. U.S. stock futures fell as investors rotated away from risk assets. The S&P 500 futures contract slipped 0.3% in late trading, while the Nasdaq 100 futures lost 0.4%.

The White House did not immediately respond to a request for details on what "pay the price" would involve. Central Command said the strikes targeted Iranian military infrastructure connected to the Apache attack.

This is a developing story.