Saudi Tadawul rises 1.1% as Trump cancels Iran strike

Saudi Tadawul rose 1.1 percent to 10,705.87 points on Sunday after President Trump said he agreed to cancel a military strike on Iran, with the benchmark closing near its session high.

"The crown prince stressed the need to prioritize dialogue to reduce escalation and the importance of making every possible effort to achieve calm that paves the way for diplomatic solutions," the Saudi Foreign Ministry said in a readout of Crown Prince Mohammed bin Salman's Saturday call with Trump.

Saudi Aramco gained 0.38 percent to 26.58 riyals, while the Albilad Southern East MSCI Hong Kong China Stock ETF listed in Riyadh slipped 0.18 percent to 11.06 riyals. The index opened slightly higher, turned lower, then rebounded and held firm at highs for most of the session before closing near the day's high.

Trump said on Truth Social that the deal "would include the Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran's nuclear threat," adding that the U.S. military remained "locked and loaded." Iran's military called the claim a "lie," and Tehran's defense minister said the country was "neither surprised nor passive."

The announcement marked another abrupt shift in the five-month-old conflict. Only a day earlier, Trump told reporters the U.S. would hit Iran "very hard" until they "can't take it anymore." The U.S. and Israel attacked Iran on Feb. 28, a war Trump said was aimed at destroying Tehran's missile capabilities and preventing it from obtaining a nuclear weapon. An interim agreement reached in mid-June halted the fighting but crumbled within weeks as Iran resumed attacks on shipping.

The Strait of Hormuz, which normally carries about 20 percent of global oil shipments, has been effectively closed by Iran since the start of the war. Brent crude soared from about $70 to above $100 a barrel for much of March, April and May, at one point reaching $126. The conflict has also driven massive profits for oil majors — Exxon Mobil doubled its second-quarter profits to $14.53 billion, while Chevron nearly quadrupled to $12.07 billion.

Hormuz remains the flashpoint

Iran's paramilitary Revolutionary Guard Corps said Friday it had hit two tankers trying to pass through the Strait of Hormuz under a U.S. "aerial escort," while the British Navy reported a tanker struck by an "unknown projectile" off the coast of Oman. Iran's Persian Gulf Strait Authority said transit through the waterway is "not possible" because of "aggressive actions" from the United States.

The Saudi market's gains came despite the contradiction between Trump's claim and Iran's denial, with traders weighing the prospect of de-escalation against the risk of renewed strikes. The U.S. State Department issued security alerts for Americans in 10 countries in the region, urging them to prepare for flight cancellations and temporary airspace closures. Iraq and Turkey also announced a one-year agreement to continue crude oil flows through the Kirkuk-Ceyhan pipeline, a route that bypasses the Strait of Hormuz entirely.

The war has become increasingly unpopular among Americans with midterm elections looming in November. A Senate resolution to limit Trump's war powers failed 49-50, with three Republicans joining Democrats in support. U.N. Secretary-General Antonio Guterres warned the conflict is "increasingly becoming a driver of global instability," citing upended energy markets and surging food and fertilizer prices.

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