Mumbai: US futures tumbled Sunday after the US seized an Iranian cargo ship, in a re-escalation of tensions between the two countries. While futures tied to the Dow Jones Industrial Average shed nearly 1%, losses in those tied to the tech-heavy Nasdaq were lower compared to its peers. Crude oil prices resumed their climb and rose over 5% on Monday after Iran closed the Strait of Hormuz on Saturday due to the continued naval blockade of its ports by the US.
At 0735 IST, Brent Crude futures were at $94.64 per barrel. US President Donald Trump said the seized Iranian carrier,"is under U.S. Treasury Sanctions because of their prior history of illegal activity. We have full custody of the ship, and are seeing what's on board." Further, Trump threatened to attack all power facilities and bridges in Iran if the country did not agree to a deal with the US. The ongoing ceasefire between the two countries is set to expire Wednesday.
During the period of truce, the US maintained its naval blockade of Iranian ports, while Iran reopened and subsequently closed the Strait of Hormuz, a key chokepoint which controlled over 20% of the world's oil supply before the conflict began Feb.28. On Sunday, Iran also rejected a second round of peace talks in Pakistan, citing "excessive demands" by the US, reports said.
This comes after US markets came off a winning week, with the Nasdaq Composite and S&P 500 touching record highs on the news of a ceasefire between Lebanon and Israel and after Iran had declared the Strait of Hormuz open. "After the Nasdaq has rallied for 13 days in a row on hopes for a deal, we ended the week very overbought on a short term basis.
And now the situation with Iran is gotten even more complicated and uncertain on when this conflict will end and when the Strait will fully reopen without fear of attack," CNBC quoted Peter Boockvar, chief investment officer at OnePoint BFG Wealth Partners, as saying.
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