Brent Oil Jumps 4% as Trump Threatens ‘Severe Strike’ on Iran

Global risk assets retreated Wednesday after former President Donald Trump signaled a high probability of a US strike on Iran within weeks, causing Brent crude oil to jump more than 4 percent.

"We will carry out an extremely severe strike on Iran in the next two to three weeks," Trump said during a speech. He specified that if no agreement is reached, the US would target the country's power plants.

The threat triggered a classic risk-off reaction across markets. International benchmark Brent crude rose 4 percent, while gold, typically a safe haven, fell over 1 percent. In equities, South Korea’s Kospi index dropped 2.1 percent and futures for the S&P 500 slid 0.6 percent.

The comments inject significant uncertainty into the global economic outlook, threatening to disrupt oil supplies and fuel inflation. A conflict could jeopardize the Strait of Hormuz, a critical chokepoint through which roughly a fifth of the world's oil supply passes daily.

The direct threat against a major oil-producing nation puts sustained upward pressure on energy prices. While Trump noted the US has "not yet attacked their oil" facilities, the targeting of power plants would represent a severe escalation of hostilities. Any disruption to Iran's energy infrastructure or its ability to export crude could tighten an already fragile global oil balance, potentially pushing prices higher and feeding into inflationary pressures that central banks are struggling to contain.

The last significant flare-up in US-Iran tensions in early 2020 saw oil prices spike more than 3 percent in a single day. The current threats come at a time when global equity markets are already grappling with uncertainty over the path of interest rates and economic growth, making them particularly vulnerable to geopolitical shocks. The decline in Asian and US equity futures reflects investor concern that a conflict could dampen corporate earnings and consumer spending.

This article is for informational purposes only and does not constitute investment advice.