Donald Trump declared at the NATO summit in Ankara that the Iran-US ceasefire is over, sending oil prices sharply higher and US stock markets tumbling. According to latest reports, Trump criticized Iran's leadership, calling them 'sick people' and said he was 'very upset' with the country's military alliance with Spain. 'As far as I'm concerned, it's over,' Trump stated, though he indicated that US negotiators wanted to continue talks. The declaration came as the US continued strikes on Iran, with the latest escalation following a series of Iranian attacks on vessels transiting the Strait of Hormuz, where three commercial vessels were attacked in the past day - the most since the agreement took effect. The US has blamed Iran for these strikes, with the escalation threatening fragile negotiations aimed at securing a permanent peace.
Oil prices have climbed around 5% on Wednesday, with Brent crude jumping more than 5% to crest $80 a barrel after Trump's declaration that the Iran-US ceasefire is over. As reported by Investing.com India, the latest escalation follows a series of Iranian attacks on vessels transiting the Strait of Hormuz, with three commercial vessels attacked in the past day - the most since the agreement took effect. The US has blamed Iran for these strikes, with the escalation threatening fragile negotiations aimed at securing a permanent peace. WTI spot oil climbed above $73, while the December 2026 WTI oil futures contract is trading slightly above $71, essentially erasing the decline of the past two weeks. The renewed tensions have placed the U.S.-Iran peace process under renewed strain and revived a geopolitical risk premium that had largely disappeared over recent weeks.
US stock markets fell sharply on Wednesday as the US continued strikes on Iran and the Federal Reserve flagged concerns that would warrant higher interest rates. According to latest reports, the Dow fell 1.09%, or 500 points, while the S&P 500 saw a small loss and the tech-heavy Nasdaq rose slightly. Global stocks had fallen earlier in the day, with the UK's FTSE 100 down 1% as Japan's Nikkei fell 2.1%. The economic impacts of the Iran war have reverberated across the globe, with the International Monetary Fund lowering its global economic growth forecast to 3%, down from 3.1% in April, citing conflict in the Middle East and pressurized AI spending. Global growth in 2024 and 2025 averaged 3.5%.
Markets viewed the June FOMC meeting as more hawkish than expected, with nine of the 18 policymakers projecting at least one further rate hike before the end of 2026. According to Investing.com India, the minutes could prove shorter and less revealing than in previous years under Chair Kevin Warsh, who has repeatedly argued in favor of leaner central bank communication. With the post-meeting statement containing just 130 words, the minutes will provide the first detailed insight into policymakers' assessment of inflation risks and the balance of opinion within the Committee, giving them greater importance than usual. Markets are currently assigning an 80% probability to a September rate hike, with today's FOMC minutes release from the June 17 meeting and next week's Fed Chair Warsh testimony before Congress expected to fill in many of the current gaps. The last missing piece of the puzzle being Fedspeak, which continues to be exceptionally light, especially from the more hawkish FOMC members.
US inflation concerns have intensified with the annualized US inflation rate jumping to 4.2% in May, a three-year high and more than double the Federal Reserve's target inflation rate of 2%. According to latest reports, US gas prices at the pump sit at an average of $3.79 per gallon, $0.65 per gallon higher compared with a year ago, according to AAA. US diesel futures also rose 13% on Wednesday after Russia implemented a diesel export ban following a Ukrainian drone strike that hit key refineries. The inflation surge, combined with geopolitical tensions from the Iran situation, has created a challenging environment for monetary policy and economic stability. EUR/USD faces resistance at 1.1450 with the RSI remaining below 50, keeping the broader bias to the downside, while failure to break above 1.1450 could see sellers retest 1.1325.
