Trump Scraps Iran Deal, Sending Oil Prices Surging 6%
President Trump declared the US-Iran memorandum of understanding dead, sparking a sharp oil rally and broad market selloff.
President Donald Trump abruptly terminated the US-Iran ceasefire memorandum of understanding Tuesday during his visit to Ankara for the NATO summit, declaring that Washington no longer wished to engage with Tehran and calling Iranian officials "scum." Iran swiftly condemned the move as a "blatant violation" of the existing ceasefire arrangement, effectively resetting the fraught relationship between the two countries back to square one.
Oil markets reacted immediately and sharply. WTI crude surged 6% to $74.70 a barrel, while Brent crude climbed 5.5% to $78.30, reflecting traders' fears that a renewed US-Iran confrontation could disrupt global supply flows. China's reported decision to lift restrictions on refined fuel exports for the remainder of July added a counterweight to the supply narrative but failed to temper the geopolitical premium baked into crude prices.
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The diplomatic shock sent risk sentiment into reverse across global markets. European equity indices dropped more than 2%, S&P 500 futures fell 1%, and Nasdaq futures shed 1.4%, deepening losses already sustained the prior session. Ten-year Treasury yields climbed 5 basis points to 4.58%, approaching the June high, as bond markets also sold off. Gold fell 1.4% to $4,050 and silver dropped 2.3% to $58.65, pressured by a combination of the Iran escalation and rising bets on a Federal Reserve rate hike.
Trump's Ankara visit generated additional geopolitical turbulence beyond the Iran rupture. He threatened to sever trade ties with Spain over what he characterized as insufficient NATO defense spending, and separately renewed his push regarding Greenland, adding further uncertainty to trans-Atlantic relations ahead of key alliance negotiations. The dollar held steadier against most peers, with EUR/USD flat at 1.1410 and USD/JPY edging up 0.2% to 162.40. The New Zealand dollar was the top-performing major currency, gaining 0.4% to 0.5700 after the RBNZ struck a more hawkish tone earlier in the session.
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