Trump’s Iran ultimatum jolts global markets

Global financial markets came under fresh strain after US President Donald Trump issued an expletive-laden ultimatum threatening strikes on Iran’s power plants and bridges unless Tehran reopens the Strait of Hormuz by Tuesday. In social media posts, Trump labeled Tuesday “Power Plant Day, and Bridge Day” and warned Iran would be “living in Hell” if the vital oil shipping chokepoint remains closed.

The threats followed the downing of a US F-15E over Iran and a dramatic rescue of its crew, as well as ongoing strikes by both sides on civilian and energy infrastructure across the Middle East. Tehran has rejected Washington’s demands and continued attacks on regional oil, petrochemical and power facilities in Gulf states and Israel, keeping most traffic through Hormuz shut.

Oil prices extended sharp gains, with Brent crude climbing above $111 a barrel and West Texas Intermediate near or above $112 in early Asian trading. Physical benchmarks showed even more stress, with dated Brent reported above $140, levels not seen since 2008. US gasoline prices have risen by roughly $1 per gallon since the conflict began.

The six-week-old war has created a supply shock now threatening to become a broader energy crisis, as Iranian restrictions on Hormuz have choked off a key route for Persian Gulf exports. OPEC+ agreed a 206,000 barrel-per-day quota increase for May, but several producers behind Hormuz are unable to boost output because of war damage to production and transport infrastructure.

On April 5, Iran announced a partial reopening of the strait for “brotherly” Iraq, exempting it from Hormuz restrictions that had slashed Iraqi exports. Officials said the move could eventually allow up to 3 million barrels per day of Iraqi oil back to market, but warned that actual flows depend on insurers and shippers’ willingness to enter the conflict zone.

The US dollar index rose above 100.2, extending gains as investors sought safety and higher US yields amid surging energy prices. Analysts cited support from firm energy markets, stabilizing US labor conditions and safe-haven demand for the greenback. Against the yen, the dollar traded near 159.6.

In contrast, gold prices fell more than 1%, with bullion extending losses as Trump escalated threats of military action if Hormuz stays shut. The move underscored an unusual pattern of a stronger dollar and higher yields outweighing traditional flight-to-safety demand for the metal.

Government bond markets weakened as investors priced in higher inflation risks and potential delays to monetary easing. The US 10-year Treasury yield rose to around 4.35%, with Trading Economics citing a move to about 4.3584%, as prices fell on fears that energy-driven inflation could prompt the Federal Reserve to pause or even raise rates later this year.

Similar pressure was evident elsewhere. Japanese 10-year government bond yields climbed to about 2.4%, the highest since 1999, while India’s 10-year yield rose to 7.1329% at the end of last week after its biggest two-week jump since 2022, as elevated Brent prices around $110 and heavy foreign selling hit local debt.

US equity futures fell, with S&P 500 (SPX), Nasdaq 100 (NDX) and Dow Jones contracts all lower as traders reacted to Trump’s latest deadline and ongoing strikes on energy assets. Asia’s picture was mixed: S&P 500 (SPX) e-mini futures dipped, but Japan’s Nikkei 225 (NKY) gained around 1%–1.2% and South Korea’s Kospi rose about 2%.

Regionally, risk sentiment remained fragile. The South Korean won weakened past 1,510 per dollar, and investors in India pulled money from local assets at a record pace amid war-related energy concerns. Analysts noted that developments in the Middle East are likely to dominate trading even as key US data releases approach.

Adding to the policy dilemma, US data released during Friday’s holiday showed nonfarm payrolls increased by 178,000 in March, far above forecasts of 60,000 and the biggest gain in more than a year. The unemployment rate edged down to 4.3% from 4.4%, while wage growth moderated.

The stronger labor figures, combined with surging oil prices and upcoming US inflation data and Federal Open Market Committee minutes, have fueled expectations that the Fed may delay rate cuts. Swaps pricing implies no change in US policy rates until 2027, underscoring how the Iran conflict and energy shock are reshaping interest-rate expectations.