Oil Surges 10% as Trump Announces Iran Blockade and Hormuz Toll
Trump's blockade of Iran and a 20% Strait of Hormuz shipping toll rattled markets, spiking oil and pushing rate-hike odds higher.
If you thought geopolitical calm was here to stay, Wednesday had other plans. President Trump announced a full naval blockade of Iran and — in a move that caught pretty much everyone off guard — slapped a 20% toll on all cargo passing through the Strait of Hormuz in exchange for what he called "safe passage." Fresh strikes on Iranian commercial ships followed, and suddenly markets were right back in April-chaos mode.
Oil was the obvious winner in this mess. WTI crude jumped nearly 10%, finishing up about $6.24 at $77.64 a barrel. Gold, which you might expect to rally on geopolitical fear, actually dropped $121 to just under $4,000 — likely because a stronger dollar crowded it out. The S&P 500 slid 0.8% and the Nasdaq fell 1.7%, with chip stocks taking a particular beating: Micron dropped nearly 5% and Intel shed close to 7%.
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The dollar got a second boost from Federal Reserve Governor Christopher Waller, who essentially completed a U-turn on his previously dovish stance. Waller said Tuesday's upcoming inflation data could be decisive, warning that another hot core inflation print would force the Fed to "consider tightening monetary policy in the near term." Markets took that seriously — odds of a rate hike at the July 29 Fed meeting jumped to 40%. Two-year Treasury yields climbed to their highest level since February 2025, back before the Fed had cut rates three times.
In currency markets, USD/JPY crept toward 162.50 before stalling — traders are keeping one eye on potential Japanese intervention at those levels. The euro quietly sold off throughout the session, landing about 30 pips lower at 1.1383. The Australian dollar was the session's biggest loser among major currencies, while the greenback led across the board.
With markets closing at the extremes — stocks near session lows, bond yields near highs, FX at the edges — Thursday's bank earnings and a planned Trump speech could either calm things down or pour more fuel on the fire. Continue reading at Forexlive.
