‘The ceasefire is effectively over’: Iran returns to Wall Street’s focus as oil jumps 6%

(SeaPRwire) –   The truce between Iran and the U.S. that had been deteriorating over the past four weeks finally showed its first real signs of strain on Monday.

President Donald Trump announced Sunday that the U.S. would assist ships in exiting the Strait of Hormuz, describing the initiative as Project Freedom, which challenged Iran’s influence over the strategic waterway.

On Monday morning, U.S. Central Command reported that it helped two American-flagged commercial vessels navigate through the strait, with two destroyers also crossing into and operating within the Persian Gulf.

It was at this point that hostilities escalated. U.S. Central Command Chief Admiral Brad Cooper stated that the U.S. intercepted and downed Iranian drones and missiles, while also destroying seven Iranian fast attack boats.

Iranian drones also struck Fujairah, one of the UAE’s major fueling hubs. The United Arab Emirates confirmed it had intercepted three Iranian “loitering munitions” over its territorial waters. In a Fox News interview, Trump warned that Iranian forces would be “blown off the face of the earth” if they targeted a ship in the strait.

When asked by Bloomberg whether the ceasefire had been breached, Cooper declined to respond. U.S. Ambassador to the UN Mike Waltz similarly avoided answering, calling the situation “fluid.”

For the first time in weeks, financial markets began to reflect the renewed uncertainty, signaling concern. The Dow Jones Industrial Average dropped nearly 560 points, or 1.1%. Brent crude surged almost 6% to settle above $114 per barrel, while WTI crude rose more than 4% to close above $106. The VIX volatility index also saw a significant increase.

“You could say the ceasefire has ceased,” wrote oil analyst Rory Johnston on X.

Markets that had largely ignored the conflict—driven instead by strong earnings reports and artificial intelligence-related announcements—now face the challenge of pricing in renewed geopolitical risk. However, the fog of war remains thick and unpredictable.

Iran has declared it will not reopen the Strait of Hormuz until the U.S. lifts its naval blockade on Iranian ports—a condition the U.S. has shown no intention of meeting.

Even if the strait were to reopen tomorrow, Chevron CEO Mike Wirth noted at the Milken Institute on Monday that full normalization would take months. This is due to the need to clear mines from the sea lanes, reposition hundreds of stranded vessels currently in the Gulf, and restore confidence among insurance companies willing to underwrite tanker operations.

Traders on prediction market Kalshi now estimate only a 56% chance that shipping traffic returns to normal by August—a significant decline from previous consensus forecasts made a month earlier.

Meanwhile, New York Fed President John Williams remarked on Monday afternoon that supply disruptions driven by the Middle East conflict are likely to keep inflation around 3% for the remainder of the year. As a result, inflation will remain above the Federal Reserve’s 2% target for several more months, extending a trend that has persisted for five consecutive years.

“We don’t anticipate the war being resolved quickly,” Jay Hatfield, founder and CEO of Infrastructure Capital Advisors, told CNBC. “We don’t think Iran is going to have an epiphany and give up their nuclear ambitions, so that’s probably going to have to happen by force—and that’s not something the market is going to welcome.”