US Stock Market Declines as War Fears Intensify

Global Markets on High Alert as Iran Deadline Looms

US stock futures traded lower in Tuesday's session, reflecting growing concerns over escalating tensions in West Asia. Investors were closely monitoring the situation as US President Donald Trump's deadline for Iran to reopen the Strait of Hormuz and agree to a ceasefire approached. Failure to meet the deadline could lead to military retaliation.

As the deadline drew near, futures of the three key indices - the Dow Jones Industrial Average, the S&P 500, and the Nasdaq - were down in the range of 0.4% to 0.6%. The cautious market sentiment was a direct result of Trump's latest threats and Iran's response. Tehran reiterated its stance that it seeks a permanent end to the war, rejecting a 45-day ceasefire proposal and warning of potential retaliation against infrastructure belonging to US allies in the Gulf.

A senior Iranian source informed Reuters that Tehran had rejected a proposal conveyed by intermediaries for a temporary ceasefire. Talks on a lasting peace could begin only after the US and Israel end their strikes, provide assurances they will not resume them, and offer compensation for damage. The ongoing situation has led to a heightened sense of uncertainty, with investors hesitant to bet on whether Trump would follow through on his threats or pull back, as he has done in the past.

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On Monday, Trump doubled down on his threats, stating that he would destroy key infrastructure in Iran within hours if the deadline was not met. The US President had earlier extended the deadline from Monday to Tuesday, warning that without a deal, "hell will rain down on them." The initial deadline was set for 23 March, but it has shifted multiple times in the following weeks as Trump alternated between threats, extensions, and optimistic statements on negotiations.

Oil Prices Surge Amid Escalating Tensions

Crude oil prices rebounded in response to the escalating geopolitical tensions. Brent crude oil prices traded 1% higher at $110 a barrel, while WTI crude futures jumped 2.53% to $115.25 a barrel. On Thursday, Brent prices had surged over 6% after Trump said military operations would be intensified over the next two to three weeks.

The closure of the Strait of Hormuz by Iran and continued attacks on energy infrastructure by the US, Israel, and Iran have triggered force majeure declarations by several oil-producing nations in the Middle East. This has raised concerns that a prolonged conflict could deepen supply shortages. Since war erupted in the Middle East on 28 February, the passage of oil tankers through the Strait of Hormuz has all but stopped, cutting off a vital passageway where roughly one-fifth of the world's oil sails through on a typical day.

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Iran has effectively stopped tankers from using the Strait of Hormuz, the shipping lane between the Persian Gulf and the Gulf of Oman — the gateway to the Indian Ocean — through which nearly 20% of the world's oil is transported.