Oil Prices Drop, Stocks Surge After Trump Announces Major Development

Wall Street roared back Monday after President Trump hit pause on his ultimatum to Iran, easing fears of a wider war and sending stocks soaring.

The Dow Jones Industrial Average surged 1,076 points, or 2.4%, to 46,654 in early trading. The S&P 500 climbed 138 points, or 2.1%, while the Nasdaq Composite jumped 2.4%.

The rally came after Trump said the U.S. is engaged in “good and productive” talks with Tehran and would delay potential military action tied to the Strait of Hormuz standoff.

Just hours earlier, markets were headed the other way. Futures had pointed to nearly a 1% drop before Trump’s announcement flipped sentiment.

Oil prices also pulled back sharply. Brent crude briefly dropped to $96 per barrel after the news before rebounding to $101.26. It had been flirting with $120 last week. West Texas Intermediate fell to $84 before climbing back to $90.11.

Trump had set a Monday night deadline for Iran to reopen shipping through the Strait of Hormuz, a critical chokepoint that carries roughly 20% of the world’s oil. He warned the U.S. would “obliterate” Iran’s power plants if Tehran refused. Iran, in turn, threatened strikes on U.S. and Israeli energy infrastructure.

By Monday morning, Trump said the U.S. would hold off on hitting Iranian energy targets for five days, dialing down immediate fears of escalation and a deeper oil shock.

“The global economy was teetering on the edge of a precipice the likes of which Trump had never encountered during either of his two terms (worse than COVID and worse than tariffs), and his instinct for self-preservation is too great to drive off the cliff deliberately,” Wall Street analyst Adam Crisafulli, head of Vital Knowledge, told investors in a research note.

Tehran quickly pushed back on Trump’s claims of diplomacy.

“We deny what US President Donald Trump said regarding negotiations taking place between the United States of America and the Islamic Republic of Iran,” the Iranian Foreign Ministry said.

Even with Monday’s pullback, oil remains elevated. Crude is still about 45% higher than before the Iran war began in late February. Gas prices are hitting consumers hard, with Americans paying an average of $3.96 per gallon, up more than $1 in just a month, according to AAA.

Crisafulli warned the economic damage won’t disappear overnight. “But at least now there is a line of sight toward resolution,” he said.

Investors, however, aren’t fully convinced the rebound will stick.

“With stocks challenging the boundary between consolidation and a larger downturn, the market woke up to some potentially good news out of the Middle East on Monday,” said Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley. “But follow-through on any relief rally will likely require tangible follow-through on the geopolitical front.”

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