Trump Kills Iran Deal, Sending Oil Prices Surging 6%
Trump declared the US-Iran memorandum of understanding dead at the NATO summit, triggering a broad market selloff and a sharp spike in crude prices.
Markets faced a sharp geopolitical shock Tuesday morning as President Trump, speaking on the sidelines of the NATO summit in Ankara, declared the US-Iran ceasefire memorandum of understanding officially over. His remarks — which included unusually blunt personal attacks on Iranian leadership — effectively reset the fragile diplomatic framework that had been holding between Washington and Tehran, leaving the relationship in a state of open-ended uncertainty.
The immediate market reaction was severe and swift. WTI crude oil surged 6% to $74.70, while Brent crude climbed 5.5% to $78.30, as traders priced in the prospect of tightened Iranian oil supply and renewed Middle East instability. The move is a reminder of how quickly geopolitical risk can reprice energy markets when a major producer's export outlook suddenly clouds over.
Read more Iran Conflict Fears Drag Stocks Lower as Oil Prices Surge →
The broader risk-off impulse spilled across asset classes. European equity indices fell more than 2%, and S&P 500 futures deepened losses to 1% while Nasdaq futures dropped 1.4% — compounding weakness from the prior session. Notably, gold failed to play its traditional safe-haven role, sliding 1.4% to $4,050, weighed down by rising rate-hike expectations and a firmer dollar. Ten-year Treasury yields climbed 5 basis points to 4.58%, testing June highs and signaling that bond markets are not treating this as a simple flight-to-safety moment.
Trump's Ankara visit generated additional friction beyond Iran. He threatened to cut trade ties with Spain over what he described as inadequate NATO defense spending, and separately renewed focus on his Greenland agenda. The cumulative effect was a morning session defined by unpredictability — the kind of environment that typically compresses risk appetite and forces traders to hedge aggressively. Iran, for its part, issued a statement condemning what it called a US violation of the ceasefire deal, leaving little near-term prospect of re-engagement. China's reported decision to lift restrictions on refined fuel exports for the remainder of July offered a partial offset to the oil supply story, though it did little to calm the broader market mood.
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