Trump’s Iran Deadline: Markets Fall as Strait of Hormuz Tensions Rise

Wall Street opened lower Monday as a 48-hour deadline set by President Donald Trump for Iran to reopen the Strait of Hormuz loomed, exacerbating an already volatile energy market. Futures tied to the Dow Jones industrial average fell 78 points, or 0.17%, even as S&P 500 futures were down 0.25% and Nasdaq futures lost 0.32%.

The price of oil offered little respite, with U.S. Oil futures dipping 0.12% to $98.11 a barrel and Brent crude easing 0.38% to $111.76. The national average gasoline price reached $3.94 a gallon on Sunday, a dollar more than a month ago, according to AAA. The yield on the 10-year Treasury rose 1.7 basis points to 4.409%, and the U.S. Dollar was up 0.1% against the euro and flat against the yen.

Trump issued the ultimatum Saturday evening, threatening to destroy Iran’s power plants if it did not “fully open, without threat,” the Strait of Hormuz. The narrow waterway has been effectively closed to shipping by Iranian actions since February 28, according to the BBC. Iran responded with a warning that any attack on its power plants would be met with retaliatory strikes targeting vital infrastructure in the region, including desalination plants.

The escalating rhetoric follows months of tension. Earlier this month, David Sacks, Trump’s AI and crypto czar, cautioned against further escalation, urging the president to declare victory and withdraw from the conflict. Sacks warned on the All-In podcast on March 13 that continued destruction could render the Gulf “almost uninhabitable” due to water scarcity, potentially causing economic and humanitarian catastrophe.

The U.S. Military posture in the region is rapidly shifting. Trump is deploying three additional amphibious assault ships and 2,500 Marines to the Middle East, supplementing a Marine Expeditionary Unit already en route. More than 50,000 U.S. Troops are currently stationed in the region. Simultaneously, Iran launched a ballistic missile attack on a U.S.-U.K. Base on the island of Diego Garcia in the Indian Ocean, demonstrating a longer range capability than previously assessed, potentially reaching parts of Europe, according to the Associated Press.

NATO Secretary General Mark Rutte publicly backed Trump’s stance on Sunday, predicting eventual alliance support. “If Iran would have the nuclear capability, including, together with the missile capability, it will be a direct threat, a existential threat, to Israel, to the region, to Europe, to the stability in the world,” Rutte told CBS News. However, several NATO members previously rebuffed Trump’s request for naval escorts.

The United Arab Emirates signaled a hardening stance toward Iran, aligning more closely with the U.S. And Israeli positions. Anwar Gargash, a senior UAE diplomat, wrote on X that the focus must shift beyond a ceasefire to “lasting security in the Arabian Gulf, curbing the nuclear threat, missiles, drones, and the bullying of the straits.” He stated that allowing Iranian aggression to become a “permanent state of threat” is “inconceivable.”

While some analysts have proposed alternative strategies, such as a naval blockade of Iran’s oil exports to pressure the regime to reopen the strait, the thousands of Marines headed to the Middle East could be poised for a direct confrontation to secure the Strait of Hormuz and prevent further disruption. Robin Brooks, a senior fellow at the Brookings Institution, suggested on Substack March 13 that imploding Iran’s economy by shutting down its oil exports could be a faster solution.

As of Monday afternoon, there was no public evidence of diplomatic efforts to de-escalate the situation.