Futures tied to the main U.S. stock indexes traded lower on Monday as the conflict with Iran continues, fueling concerns that global energy prices could remain elevated for an extended period. U.S. President Donald Trump has given Iran until Monday night to reopen the Strait of Hormuz, a demand that Tehran has rejected. At the same time, the International Energy Agency warned the conflict could trigger a “very severe” oil crisis, while the U.S. dollar strengthened and gold prices moved lower.
Futures slip
U.S. equity futures declined early Monday as the war involving Iran entered its fourth week.
By 04:04 ET, Dow futures had fallen 305 points (0.7%), S&P 500 futures were down 55 points (0.8%), and Nasdaq 100 futures had dropped 227 points (0.9%).
Global equity markets also came under renewed selling pressure, particularly across Asia, where many economies rely heavily on energy imports from the Persian Gulf. Europe’s Stoxx 600 — closely watched in a region that also depends on Gulf natural gas shipments — also moved lower.
On Friday, Wall Street’s major indexes ended the session in negative territory as investors worried that a prolonged U.S.-Israeli campaign against Iran could deepen an already growing shock in energy prices.
Brent crude, the global oil benchmark, ended last week just above $112 per barrel — far above the roughly $70 per barrel level seen before the conflict erupted in late February.
The surge in oil prices has already produced ripple effects. U.S. gasoline prices have jumped nearly 32% to $3.94 per gallon since the conflict began, according to the New York Times, citing data from the AAA motor club. Diesel prices have also risen, increasing the risk of broader inflation pressures — an issue that reportedly caught the attention of Federal Reserve policymakers last week.
The Federal Reserve kept interest rates unchanged at 3.5% to 3.75%, while expectations for rate cuts later this year have weakened. Some market participants have even begun speculating that a sustained spike in energy prices could push the central bank to consider raising rates again.
Trump issues ultimatum to Iran
Investors have been closely watching developments in the Middle East, including an ultimatum from President Trump directed at Tehran.
Trump warned that the U.S. could target critical Iranian energy facilities if Iran does not reopen the Strait of Hormuz — a narrow shipping route that has become a key flashpoint in the conflict — by Monday night. Around 20% of global oil supply flows through the strait, but tanker traffic has largely halted amid fears that Iran could attack ships it views as connected to hostile countries.
Iran rejected the warning, saying the strait would remain “completely closed” if any of its energy infrastructure were attacked.
Signals from Washington have also appeared mixed. While Trump said the U.S. could “obliterate” key Iranian power sites, he has also suggested the military operation could soon be “winding down.” Media reports indicate the White House has begun considering what a potential ceasefire framework with Tehran might look like.
Despite continued strikes on Tehran and Israel declaring that its campaign against Iran-backed militants in Lebanon is only beginning, Trump “seems to be steering toward an exit ramp” while facing growing domestic criticism over the war and its economic fallout, analysts at Vital Knowledge said.
IEA warns of “very severe” oil crisis
Even so, the crisis in the Middle East represents a “very severe” shock to global oil markets, according to International Energy Agency Executive Director Fatih Birol, who said the disruption could surpass the scale of past crises in the 1970s.
Speaking at an event in Australia, Birol said the IEA is in discussions with governments in Europe and Asia about possibly releasing additional oil reserves to offset supply disruptions caused by the blockage of the Strait of Hormuz.
“If it is necessary, of course, we will do it. We look at the conditions, we will analyze, assess the markets and discuss with our member countries,” he said.
Earlier this month, IEA member nations agreed to release a record 400 million barrels from strategic reserves — about 20% of total stockpiles.
However, Birol stressed — echoing the view of many analysts — that only a full reopening of the Strait of Hormuz will restore stability to energy markets.
Oil prices continued climbing Monday, with Brent futures rising 1.7% to $114.07 per barrel.
Dollar strengthens
The U.S. dollar gained as investors sought the currency as a relative safe haven amid the ongoing geopolitical tensions.
By 04:40 ET (08:40 GMT), the U.S. dollar index, which measures the greenback against a basket of major currencies, had increased 0.1% to 99.75.
Over the past month the index has climbed more than 2%, although it posted its first weekly decline since the conflict began on Friday.
Elsewhere, the Australian dollar — often viewed as a gauge of global risk appetite — weakened. The Japanese yen also declined, prompting Japan’s top currency official to warn that authorities are ready to intervene if volatility becomes excessive.
“Risk sentiment is deteriorating at the start of this week as the U.S. and Iran appear far from peace discussions,” analysts at ING said.
Gold falls
Analysts at ING, including Francesco Pesole and Chris Turner, also noted that precious metals were trending lower, arguing that current market conditions “heavily favors” the dollar.
Gold prices dropped sharply on Monday as concerns about persistent inflation and elevated interest rates dampened demand for the metal as a safe haven. The decline effectively wiped out most of gold’s gains recorded earlier this year.
Investors are increasingly worried that higher energy costs could fuel another rise in global inflation, potentially forcing central banks to keep interest rates elevated for longer.
Because gold does not generate yield, it tends to struggle in high-interest-rate environments.
“The market is trading less on geopolitical hedging flows and more on fears that stickier inflation could prompt a more hawkish central bank stance,” analysts at OCBC said.
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