Investors are on edge after Donald Trump renewed military threats against Iran, warning the United States would “finish the job” if diplomacy fails to produce results.
Trump’s comments came following the funeral of Tehran’s former Supreme Leader Ayatollah Ali Khamenei, adding fresh uncertainty to an already fragile geopolitical landscape.
Speaking from the Oval Office, Trump said: “We’re either going to make a deal or we’re going to finish the job… and it won’t be tough to finish the job.”
He added: “I’d rather make a deal, because I don’t want to affect 91 million people.”
Trump went further, outlining the potential scale of any military action against Iran’s infrastructure and economy.
“We can knock down their bridges in one hour, we can knock out their energy supply… They don’t have any money now. We haven’t given them any money,” Trump said.
Iran’s Secretary of the Supreme National Security Council, Mohammad Baqer Zolqadr, responded sharply, branding Trump’s threat “delusional.”
Brent crude, the international benchmark for oil, climbed above $72 per barrel in response to the heightened tensions, though it remained close to its lowest levels in more than four months.
Supply had been recovering in recent days, with more vessels able to navigate the Strait of Hormuz, providing some relief to energy markets before Trump’s remarks renewed concerns.
A 60-day ceasefire between the US and Iran is currently in place but is set to expire next month, with the period intended to provide space for diplomatic negotiations to progress.
Those talks, however, have stalled, with negotiations for a lasting peace deal ending last week without any public sign of meaningful headway being made.
The combination of stalled diplomacy and Trump’s escalating rhetoric has cast a shadow over prospects for a sustained recovery in global oil supply chains.
FTSE 100 stocks remained broadly flat as traders weighed the geopolitical risks against the broader market backdrop, with sentiment fragile heading into the remainder of the week.