During a cabinet meeting, Trump significantly ramped up his rhetoric against Tehran. “Iran is begging for a deal—not me,” the president declared, adding that Tehran should have sealed the deal four weeks ago. Furthermore, Trump openly admitted that he doesn’t know if he’s even ready to negotiate with Iran at this point. Trump has added that Iran has a chance to abandon nuclear ambitions. In the meantime, we will keep blowing them away.
At the same time, the U.S. Maritime Administration warned ships of the risk posed by the Houthis in the Bab el-Mandeb Strait following Iranian threats, and Trump confirmed that the U.S. would shoot down “most” Iranian drones.
The markets reacted immediately to these remarks, risk-off sentiment hit assets sensitive to geopolitical developments. The escalation of U.S.–Iran tensions is directly driving up the risk premium in oil prices and dampening investors’ appetite for risky assets. Any uncertainty regarding a potential nuclear or trade agreement with Tehran signals that the risk premium for military escalation remains high.
Oil prices are rising following Trump's statements. Source: xStation
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