Markets decline as U.S.-Iran ceasefire talks fail, prompting Trump to consider military action to reopen the Strait of Hormuz

(SeaPRwire) –   Hopes for a peace deal with Iran dimmed on Sunday, increasing the likelihood that the global energy crisis will persist and forcing the U.S. to consider military operations to reopen the Strait of Hormuz.

Dow Jones industrial average futures declined 200 points, or 0.40%. S&P 500 futures dropped 0.33%, while Nasdaq futures fell 0.28%.

U.S. oil futures increased 2.7% to $97.97 per barrel, and Brent crude rose 2.7% to $104.01. Gold decreased 0.76% to $4,695 per ounce.

The U.S. dollar strengthened 0.2% against the euro and gained 0.14% against the yen. The yield on the 10-year Treasury remained unchanged at 4.36%.

On Sunday, Iran replied to the U.S. ceasefire proposal by stating that negotiations must address permanently ending the war across all fronts, including in Lebanon.

Sources also informed the Wall Street Journal that Iran suggested gradually reopening the strait as the U.S. lifts its naval blockade.

Although nuclear matters would be discussed during a 30-day period, Tehran rejected demands to dismantle its nuclear facilities and halt uranium enrichment for 20 years, according to the report. Iran also asked for the unfreezing of its assets held overseas.

Trump quickly criticized Iran’s response as “totally unacceptable” without referencing any particular proposals. Earlier, he accused Tehran of “playing games” with the U.S. for nearly 50 years but added, “They will be laughing no longer!”

Analysts noted that Iran’s stance has not shifted significantly, suggesting that the leadership feels it holds the advantage and is reluctant to compromise.

If the Strait of Hormuz does not open soon, global oil reserves are expected to reach critically low levels and provoke a sharp rise in prices.

Last week, Trump tried to resolve the impasse by announcing a military initiative to escort commercial vessels out of the Persian Gulf. Several ships successfully passed through the strait as U.S. destroyers repelled Iranian attacks. However, less than two days later, he halted Project Freedom.

Earlier on Sunday, Energy Secretary Chris Wright told CBS News’ Face the Nation that the U.S. “did suspend Project Freedom at Iran’s request.”

“If we attempt to militarily reopen the strait—which is a complex task, not something achievable in one or two days—they said, ‘Hold on, let’s first make a deal. Let’s negotiate over the nuclear program and finalize an agreement,’” he explained.

The suspension of Project Freedom was intended to create space for diplomatic talks with Iran, but “if it becomes evident within the next few days that there is no viable path toward a negotiated solution, we will resume the military approach to open the strait,” Wright cautioned.