U.S. Seizes Iranian Ship, Oil Surges 7% on Escalation

President Donald Trump announced Sunday that the U.S. struck and seized an Iranian-flagged cargo ship called the TOUSKA in the Gulf of Oman after it refused to stop when warned. The vessel was fired upon when it ignored a U.S. Navy order to halt, with Marines now taking custody of the ship, according to Trump. The seizure came as Iran rejected a new round of peace talks proposed by the U.S. in Pakistan, further escalating tensions between the two nations. A ceasefire between the U.S. and Iran is set to expire this week. Stock futures tumbled Sunday night following the news, with the Dow Jones Industrial Average shedding 425 points and both S&P 500 and Nasdaq-100 futures falling roughly 0.8% to 0.9%. Oil prices surged in response, with West Texas Intermediate futures jumping 7% to $90.33 per barrel and international Brent crude climbing 7% to around $96.85 per barrel. The dollar also rose Monday morning as the U.S. dollar index recovered from Friday lows. Meanwhile, Trump threatened to bomb all power plants and bridges in Iran if the country does not agree to a deal with the U.S. The Strait of Hormuz, a critical shipping lane for global crude and gas shipments, was reopened briefly by Iran on Friday before being restricted again by Saturday, with state media reporting that the U.S. had not fulfilled its obligations. The blockade will remain in place until Iran agrees to U.S. demands. Markets are now unwinding much of the gains from last week, when the S&P 500 gained 4.5% and the Nasdaq climbed 7.2% on news of the initial ceasefire between Iran and Lebanon. Market strategists noted that despite the escalation, investors are watching for signs that negotiations continue. Quarterly earnings season continues this week, with major companies including Tesla, Boeing, and Intel set to report.