Global financial markets came under renewed pressure on Wednesday after U.S. President Donald Trump declared the interim ceasefire agreement with Iran “over,” sparking a sharp rally in oil prices and a broad sell-off across European equities amid fears of a fresh escalation in the Middle East.
Speaking on the sidelines of the NATO summit in Ankara, Turkey, Trump said he no longer considered the June memorandum of understanding with Tehran to be in effect, describing further engagement with Iran as “a waste of time.” While he suggested negotiators could continue discussions, his remarks underscored the growing uncertainty surrounding diplomatic efforts.
The comments followed a dramatic escalation in hostilities after U.S. Central Command launched strikes on more than 80 Iranian military targets in retaliation for attacks on commercial vessels transiting the Strait of Hormuz. Washington also revoked a temporary licence that had permitted limited Iranian oil exports, raising concerns over global crude supply.
Energy markets reacted swiftly. Brent crude futures climbed about 5.6% to around $78 a barrel, while U.S. West Texas Intermediate (WTI) crude gained more than 6% to approximately $74.80 per barrel as traders priced in the risk of supply disruptions.
The renewed geopolitical tensions triggered a flight from risk assets. The pan-European STOXX 600 index fell roughly 1.8%, marking its steepest one-day decline since March. Germany’s DAX and France’s CAC 40 each lost more than 2%, while London’s FTSE 100 also closed lower. U.S. equity futures pointed to a weaker Wall Street open.
Investor demand for safe-haven assets intensified, pushing market volatility higher. The CBOE Volatility Index (VIX), widely regarded as Wall Street’s “fear gauge,” surged, while U.S. Treasury yields remained elevated as investors assessed the inflationary implications of rising energy prices. Higher oil prices can feed through to transport, manufacturing and consumer costs, complicating the outlook for central banks.
Market analysts said the immediate focus remains the security of the Strait of Hormuz, one of the world’s most strategically important shipping lanes through which about one-fifth of global oil supplies pass. Any prolonged disruption could tighten crude supplies, lift energy costs further and weigh on global economic growth.
Although Trump stopped short of ruling out future negotiations, investors are preparing for sustained market volatility as geopolitical risks once again dominate trading sentiment. The latest developments underscore how quickly political events in the Middle East can reverberate across global energy markets, equity valuations and inflation expectations.
