Stocks Slip, Oil Holds Above $100 as Iran Tensions Cloud Sentiment

U.S. stocks opened lower while oil prices held above $100 a barrel on March 24, as lingering doubts over easing Middle East tensions weighed on sentiment, tempering a relief rally from the previous session despite President Donald Trump’s delaying strikes on Iran’s power grid and energy infrastructure, citing progress in peace talks.

At the open, Wall Street’s main indexes gave back some of the prior session’s gains that followed Trump’s decision to extend by five days his weekend ultimatum for Iran to reopen the Strait of Hormuz within 48 hours, after he pointed to “productive” discussions with Tehran.

Iranian officials have denied that any negotiations are underway, although Iran’s foreign minister has held talks with regional counterparts.

Iran and Israel traded strikes on March 24, keeping investors on edge. Oil was trading around $102.7 a barrel after falling by as much as 15 percent in the previous session.

Stock futures pointed to a weaker open, and early trading confirmed the subdued tone. The Dow Jones Industrial Average fell 108.6  points, or 0.24 percent, at the open, the S&P 500 lost 28.9 points, or 0.44 percent, and the Nasdaq Composite dropped 139.2 points, or 0.63 percent.

The conflict has pushed oil prices higher, stoking inflation concerns and complicating the outlook for interest rates. The U.S. Federal Reserve struck a hawkish tone last week, projecting only one rate cut in 2026.

Investors initially took comfort from Trump’s peace talk comments, sending Wall Street’s main indexes up more than 1 percent on Monday in their biggest one-day gain since Feb. 6. However, momentum faded as uncertainty over the conflict persisted.

“Iranian officials have repeatedly denied that talks with the U.S. were even happening, which contributed to markets reversing some of the initial risk-on reaction late yesterday and overnight,” Deutsche Bank analysts led by Jim Reid said.

“Much now depends on the progress of any talks, and whether the more optimistic rhetoric is followed up by concrete action.”

Iran Threatens Irreversible Destruction

Over the weekend, Trump issued a 48-hour ultimatum demanding that Iran fully reopen the Strait of Hormuz, a key global energy chokepoint through which roughly one-fifth of the world’s oil and liquefied natural gas flows.

Iran has effectively blocked the strait in response to U.S. and Israeli strikes, saying it will remain closed until attacks stop. The disruption has slowed shipments of oil and key commodities, including fertilizer inputs, fueling price volatility and raising concerns about global supply shortages.

Trump said the U.S. military would “obliterate” Iran’s power plants unless the strait is reopened, drawing threats of retaliation from Tehran.

Iran has warned that any attack on its energy infrastructure would trigger a broad response.

Parliamentary Speaker Mohammad Bagher Ghalibaf said Iranian forces would target energy facilities across the region if Iran’s power plants were struck, warning such sites would be “irreversibly destroyed.”

He also issued a warning to financial entities tied to the U.S. government.

“U.S. Treasury bonds are soaked in Iranians’ blood. Purchase them, and you purchase a strike on your HQ and assets,” Ghalibaf said in a post on X.

Iran has further warned that a land invasion would result in naval mines being deployed across the Persian Gulf, effectively shutting down maritime traffic beyond the Strait of Hormuz.

The escalating rhetoric has heightened fears of a broader regional conflict with significant implications for the global economy.

“No country will be immune to the effects of this crisis if it continues to go in this direction,” International Energy Agency chief Fatih Birol said on March 23, adding that the world economy faces a “major, major threat” from the Iran war.

Calling the situation “very severe,” Birol said the impact of the Iran war was already worse than the oil shocks of the 1970s and the turmoil caused by the outbreak of the Russia–Ukraine war in 2022.

World leaders have yet to fully grasp the extent of the energy crisis facing the planet, Birol said, adding that even if peace were reached immediately, the damage already done is so significant that more pain would follow.

Talks

Trump’s remarks on Monday that Washington and Tehran had agreed on major points in talks to end the war marked the most optimistic assessment yet from the United States since hostilities began on Feb. 28.

Senior Israeli political sources told Epoch Magazine Israel that the United States had informed Israel in advance of the contacts and asked it to refrain from targeting Iranian power plants during a five-day window.

The sources said Egypt, Turkey, and Pakistan were involved in mediation efforts, with Pakistan playing a leading role. They added that U.S. contacts were handled by special envoys Steve Witkoff and Jared Kushner, while Iran may have been represented by Ghalibaf.

Iranian officials have rejected the claims, and on Monday, Iran’s military signaled it would continue fighting.

“There have been no talks with the U.S. so far. Our position on the Strait of Hormuz has not changed,” the Iranian Embassy in South Africa said in a March 23 statement.

Guy Birchall, Reuters, and The Associated Press contributed to this report.