Wall Street Sinks at Opening Bell as Iran Talks Fail; Oil Surges Above $100

Wall Street opened sharply lower on April 13, as investor sentiment was hit by the failure of U.S.–Iran peace talks and a renewed surge in oil prices, which climbed back above $100 a barrel amid escalating tensions in the Persian Gulf.

The downturn came as the United States moved to tighten pressure on Tehran, including the start of the U.S. Navy’s efforts to block maritime traffic linked to Iran after high-stakes nuclear and ceasefire negotiations in Islamabad ended without a deal.

As of 9:40 a.m. ET on April 13, the Dow Jones Industrial Average had fallen by 0.72 percent. The S&P 500 had fallen by 0.33 percent, and the Nasdaq Composite had fallen by 0.36 percent.

Brent crude rose by 5.79 percent to $100.7 per barrel, after earlier climbing above $101, and U.S. West Texas Intermediate gained 5.48 percent to $101.9, having briefly topped $103, according to OilPrice.com.

The CBOE market volatility index, often referred to as Wall Street’s “fear gauge,” climbed to 20.61 points, indicating a pickup in market volatility.

Analysts said markets had shifted back into a “risk-off” posture as geopolitical uncertainty deepened.

“We expect renewed pressure on risk assets and upward moves in oil ​early this week,” said Benjamin Jones, global head of research at Invesco.

“There has been a de-escalation in the ⁠armed conflict but the scale of the de-escalation and lack of clarity on when trade flows will resume leaves us broadly still in ​the same place—status quo—from an economic perspective.”

Others suggested that the market reaction, although negative, was relatively contained given the scale of the geopolitical risk.

“I was expecting much worse both for the equity market and oil prices this morning,” Mary-Sol Michel, director of discretionary portfolio management at Swiss Life Banque Privée, told Bloomberg on April 13.

“The market sees the blockade as a negotiation tool, but nonetheless, I feel the impact on stocks is quite modest.”

Trump said on April 12 that U.S. forces would “seek and interdict every vessel in International Waters that has paid a toll to Iran” and would prevent ships from entering or leaving the Strait of Hormuz.

“No one who pays an illegal toll will have safe passage on the high seas,” Trump added.

The U.S. Navy began a blockade of the strait at 10 a.m. ET on April 13, after peace talks with Iran, which took place in Pakistan over the weekend, ended without a deal. This applies specifically to vessels entering or exiting Iranian ports, not to broader commercial traffic moving through the strait.

Analysts said the economic implications for Iran, and potentially for global energy markets, could be significant.

Rabobank analysts said in an April 13 note that oil prices were “sure to jump” as markets priced in the potential loss of Iranian export volumes and the risk of renewed conflict.

“The U.S. blockade isn’t aimed at stopping [Gulf Cooperation Council] energy and goods flowing, which they aren’t anyway, but will stop Iran exporting energy, or importing food, industrial parts, or weaponry by sea,” RaboResearch global strategist Michael Every wrote.

The Gulf Cooperation Council is a bloc of six major oil-producing states, including Saudi Arabia and the United Arab Emirates.

“The economic impact will be enormous, and in around 13 days, Iranian oil storage will be full, forcing well shut-ins and risking permanent supply-side damage,” he said.

Miad Maleki, senior fellow at the think tank Foundation for Defense of Democracies, wrote in an April 12 post on X that the U.S. naval blockade of the Strait of Hormuz will cost Iran approximately $276 million per day in lost exports and disrupt $159 million per day in imports, which is a combined $13 billion per month.

Maleki said more than 90 percent of Iran’s $109.7 billion in annual trade transits the Persian Gulf, and he said oil and gas account for 80 percent of export earnings and 23.7 percent of GDP. He also said that Kharg Island generates about $53 billion per year in net oil export revenue.

Reuters contributed to this report.

Correction: A previous version of this article misspelled the name of Foundation for Defense of Democracies senior fellow Miad Maleki. The Epoch Times regrets the error.