Trump threatened Iran on Truth Social after Khamenei's funeral. The Strait of Hormuz standoff escalates, pushing oil and defense stocks higher.
US President Donald Trump threatened Iran on Saturday, hours after the funeral of Supreme Leader Ayatollah Ali Khamenei drew open calls for his killing. The threat, posted on Truth Social, escalates a confrontation that has already seen days of US airstrikes and Iranian retaliatory fire.
The demand came from senior US officials. They wanted Tehran to issue a public statement guaranteeing the Strait of Hormuz remains open to shipping. Iran attacked three vessels in the strait earlier this week, sparking the US bombing campaign.
Tehran has refused the demand. It insists it retains the right to control the waterway and charge transit fees. That position upends decades of precedent treating the strait as an international passage.
The escalation sent crude prices higher in after-hours trading. Brent crude jumped past $85 a barrel on Friday. Traders priced in the risk of a prolonged closure. The Strait of Hormuz handles roughly a fifth of the world's oil supply. A sustained disruption would test the administration's efforts to keep fuel costs in check. The move reverses the trend described in the Rupee Gains as Oil Slips article, where lower crude prices eased pressure on importing nations.
Defense stocks extended their weekly gains. Lockheed Martin and Northrop Grumman both rose more than 3% on Friday. Shipping equities, by contrast, sold off on the risk of higher war-risk premiums and potential rerouting around the Cape of Good Hope.
The S&P 500 futures slipped 0.6% in Sunday evening trading. Investors rotated out of risk assets. The VIX, Wall Street's fear gauge, ticked above 20 for the first time in a month.
The confrontation marks the most direct US-Iran military exchange since the 2020 killing of Qassem Soleimani. The interim deal that had paused the broader West Asian war is buckling under the crossfire. Tehran has not made the public statement Washington demands. The US military has not confirmed whether the missiles Trump referenced are under launch orders. The Strait of Hormuz remains open. Shipping sources said war-risk premiums have already doubled. European and Gulf state mediators have stepped up efforts to de-escalate the crisis. No formal talks have been scheduled.
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