Oil Surges 10% as Trump Blockades Iran and Claims Hormuz
Trump's Iran blockade and a 20% Hormuz toll sent oil spiking while stocks, gold, and bonds all flashed warning signs.
If markets felt like a replay of April's chaos on Wednesday, that's because they basically were. President Trump announced a full naval blockade of Iran, paired it with a 20% toll on all commercial goods passing through the Strait of Hormuz, and then confirmed fresh strikes on Iranian commercial ships. The result? WTI crude oil rocketed nearly 10%, touching $77.64 a barrel before trimming some gains by the close. Think of the Hormuz toll as a highway fee — except the highway carries about 20% of the world's oil supply and nobody asked permission to set up the toll booth.
Stocks weren't having any of it. The S&P 500 dropped 0.8% and the Nasdaq fell 1.7%, with chip stocks getting hit especially hard — Intel shed nearly 7% and Micron slid almost 5%. Gold, which you might expect to rally on geopolitical chaos, actually fell $121 to just under $4,000. That's a sign traders were raising cash rather than hiding in safe havens, which is its own kind of alarm bell.
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The other big story of the day was Fed Governor Waller doing a complete 180 on his earlier dovish tone. He warned that if Tuesday's core inflation data comes in hot, the Fed should seriously consider raising rates — and markets listened. Odds of a July 29 rate hike jumped to 40%, and 2-year Treasury yields climbed to their highest level since February 2025, before the Fed's three consecutive cuts. Waller also walked back his previous worries about the labor market, saying those concerns turned out to be misplaced.
The dollar was the clear winner across currency markets, with USD/JPY pushing toward 162.50 before stalling on intervention fears, and the euro quietly sliding to around 1.1383. One pattern that has veteran traders nervous: nearly every major market — stocks, currencies, bonds — closed right at its worst levels of the session, suggesting the selling pressure may not be done yet. Trump is expected to speak Thursday evening, potentially setting the stage for a longer campaign in the region. Bank earnings also kick off Thursday morning, adding another wildcard to an already turbulent week.
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