Oil Surges on Iran Sanctions Revival While AI Stocks Wobble
Trump's Treasury revokes Iran oil sanctions waiver, lifting crude prices sharply. Inflation expectations and bond yields also climbed Monday.
Crude oil staged its most convincing rally in weeks on Monday, with WTI jumping $3.45 to settle at $72.00 a barrel after the U.S. Treasury Department revoked a sanctions waiver that had allowed limited Iranian oil commerce. The move signals a broader breakdown in diplomatic momentum between Washington and Tehran, as both sides appear unable to enforce the terms of a recent memorandum of understanding. A convoy of Japanese tankers that departed through an Iranian corridor on Sunday carried what may be some of the last oil stranded under the prior arrangement — a detail that underscores how quickly the window for Iranian exports is closing.
The sanctions decision overshadowed an earlier, more modest reaction to an Iranian attack on tankers, which initially produced only an 80-cent price bump before traders recalibrated in the afternoon session. The pattern suggests markets had been skeptical of sustained Iran-related risk until the Treasury action made the geopolitical deterioration impossible to ignore. Gold, meanwhile, retreated $49 to $4,114 — a reflection of the stronger dollar and rising yields rather than any diminished appetite for safe havens in a structurally uncertain environment.
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U.S. 10-year Treasury yields climbed 7 basis points to 4.55%, amplified by a New York Fed survey showing one-year inflation expectations at their highest level since 2023. Notably, the survey indicated that oil-driven inflation expectations actually fell — meaning the broader inflation anxiety is emanating from other parts of the economy, suggesting more entrenched pricing pressures that the Fed cannot easily attribute to a single commodity shock. New York Fed President John Williams offered no fresh policy signals, maintaining his view of steady, trend-like U.S. growth.
Equity markets absorbed the macro cross-currents with mixed results. The S&P 500 slipped 0.4%, with semiconductor and AI-related names bearing the heaviest losses — some falling more than 10% and erasing much of their June gains. The volatile two-way price action in AI stocks points to a market that may be transitioning out of the euphoric early phase of the AI trade into a more selective, earnings-driven assessment of which companies can actually monetize the technology. On the trade data front, the U.S. International Trade deficit narrowed slightly to $77.6 billion against an estimate of $78.5 billion, while Canada's May trade surplus surprised to the upside at $4.24 billion versus a $2.85 billion forecast.
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