President halts military action against energy assets hours before Strait of Hormuz deadline, triggering a sharp but cautious market rally as strategists warn of lingering uncertainties.
The U.S. dollar tumbled and oil prices saw a dramatic sell-off on Monday after President Donald Trump announced a temporary halt to planned military strikes against Iranian energy infrastructure, offering a brief but powerful reprieve to jittery global markets.
In a post on Truth Social, Trump stated he had directed the Department of Defense to postpone “any and all” strikes on Iranian power plants and energy facilities for a five-day period. The announcement came just hours before a deadline set by the president for Tehran to “fully open” the Strait of Hormuz, a critical chokepoint for global oil shipments.
The dollar reacted swiftly, dropping 0.7% against the euro and 0.6% against the yen in early U.S. trading. While it managed to recover some ground, the greenback remained lower against both currencies by the end of the day. Concurrently, U.S. stock futures surged more than 2%, and Europe’s STOXX 600 index erased steep early losses to turn positive, closing up 0.7% after being down over 2.2% at its lowest point.
Crude oil prices, which had spiked on supply fears, reversed sharply. Brent crude fell as much as 14% to a low of $96 a barrel before stabilizing, trading around $100—a loss of approximately 5.4% on the day.
Analysts characterized the move as the first tangible sign of de-escalation in a conflict that entered its fourth week.
“This is clearly a positive development. The two sides are in discussions, and this is the first material sign of de-escalation that we have seen since conflict broke out at the end of February,” said Michael Brown, a strategist at Pepperstone.
However, Brown cautioned that the situation remains volatile. “The war is not yet over. While positive, it is only strikes on energy infrastructure that have been ruled out at this stage, presumably meaning that kinetic action will continue elsewhere, at least for the time being.”
The Iranian response was measured. The Iranian embassy in Kabul stated that Trump was backing down from targeting energy infrastructure “after Iran’s firm warning.” Meanwhile, Iran’s FARS news agency cited a source denying any direct or indirect communications with the United States, underscoring the fragile nature of the détente.
Market strategists warned that the initial euphoria might be premature, citing unresolved questions regarding the broader scope of the conflict.
“This says ‘strikes on energy infrastructure’. What about the rest – do the Iranians twiddle their thumbs for five days, and what about Israel? There are so many questions here that are unresolved,” said Chris Beauchamp, a strategist at IG. “Yes, markets have reacted positively. But it doesn’t change the fact that the Straits are still closed.”
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