Trump’s Iran ultimatum and signals of a possible deal keep investors on
U.S. President Donald Trump arrives to speak in the Cross Hall of the White House on April 1, 2026 in Washington, DC.
Alex Brandon-Pool | Getty Images News
Investors are caught between positioning for a swift deal that ends the war and a significant escalation that could send oil prices and bond yields soaring further.
President Donald Trump issued a profanity-laden ultimatum on Sunday, warning Iran it would be “living in Hell” if the Strait of Hormuz isn’t reopened by Tuesday, 8 p.m. ET, declaring it “Power Plant Day, and Bridge Day, all wrapped up in one.”
Separately, in an interview with Fox News on Sunday, Trump said he was hopeful that there was a “good chance” for a deal to be reached by Monday.
Conflicting signals have set up a week in which investors are forced to position for starkly divergent outcomes.
Meanwhile, Iran has rejected Trump’s latest threats, saying that the critical waterway would only reopen fully after Tehran is compensated for the damage from the war, as it continued strikes across the Gulf over the weekend, including Kuwait’s oil headquarters.
“Markets are on edge, as time is running out and the outcomes are binary — truce or escalation,” said Rob Subbaraman, head of global macro research at Nomura. Trump’s tone nonetheless suggested a degree of urgency in the White House to bring the war to an end, Subbaraman said, as investors continued their positioning to “hedge the escalation risk.”
Trump has been vacillating between hailing talks with Iran as productive with a peace deal imminent, and warning that he’s prepared to intensify military action against the Islamic Republic. He has repeatedly extended the deadline for Iran to reopen the Strait of Hormuz.
Mixed messaging has led to market volatility accompanied by choppy oil trading. The S&P 500 gained 3.4% last week, logging its best weekly gains since November as investors bought the dip on hopes of a diplomatic resolution. The Cboe Volatility Index surged from below 20 before the war to around 24 last week.
“Trump’s escalatory tone [over the weekend] is very much in line with his playbook: headline-driven, unpredictable, and designed to apply maximum pressure quickly,” said Mohit Mirpuri, an equity fund manager at SGMC Capital.
“Markets will need to get used to this style of policymaking for the foreseeable future while he’s in office,” Mirpuri added.
Stagflation risks loom
The month-long war and the effective blockade of the Strait of Hormuz threaten to plunge the world into one of its most severe energy crises in history. And even a diplomatic breakthrough might not bring a quick relief to markets, analysts said.
Brent crude prices surged to $109.77 per barrel on Monday, about 50% higher since the war broke out on Feb. 28. U.S. West Texas Intermediate has soared 66% and was trading at $111.2 as of 11 p.m. ET.
Despite a modest uptick in recent days, shipping traffic through the Strait of Hormuz — through which nearly a fourth of the world’s seaborne oil and a fifth…
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