Oil soars past $110, stocks sell off on Trump’s Iran war address

Stock futures dropped sharply and oil prices surged higher Thursday morning, after President Donald Trump’s address to the nation about the Iran war failed to reassure markets that the fighting would be over soon.

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S&P 500 futures dropped 1.7%, Nasdaq 100 futures tumbled 2% and Dow futures slid 600 points. Russell 2000 futures dropped more than 2%.

In his speech Wednesday, Trump said the war would end “shortly,” but he pledged to conduct additional “extremely hard” strikes on Iran “over the next two to three weeks.”

Missing from Trump’s address was any structured path to a ceasefire. He likewise did not put forth a plan to reopen the Strait of Hormuz, through which more than 20% of the world’s oil supply typically passes through. “The Strait will open up naturally,” Trump said.

The president also emphasized that the war will continue until the U.S. military’s objectives were “fully achieved.”

Oil prices began rising while Trump was speaking Wednesday night and have kept climbing since, reversing two days of declines.

U.S. crude oil surged 10% to $110 per barrel. Brent, the international oil benchmark, jumped 8% to more than $109 per barrel. Heating oil, a proxy for jet fuel, and natural gas prices also rose.

On Thursday, the national average price per gallon of unleaded gas hit $4.08, up from $2.98 before the war.

The “markets wanted something different,” wrote UBS Global Wealth Management CIO Paul Donovan in a note on Thursday. “U.S. escalation (however short-lived) risks being met with an Iranian response, threatening more infrastructure damage in the Gulf.”

On Thursday, U.K. Foreign Secretary Yvette Cooper hosted a video call between 35 nations, including a number of Gulf states, to discuss how to reopen the Strait of Hormuz. The United States did not attend that meeting, according to Reuters.

On the call, Cooper indicated that the war would need to ease before deploying “our collective defensive military capabilities,” according to NBC News partner Sky News.

U.S. government bonds also fell on Thursday, sending yields higher. The 10-year Treasury yield, which influences consumer mortgage rates, rose to around 4.37%.

Currently, a 30-year fixed rate mortgage is averaging 6.45%. The day before the war began, the average rate was 5.99%, according to Mortgage News Daily.