Trump threatens new Iran strikes as oil hovers near $78 a barrel

President Trump said the US will "hit" Iran tonight and tomorrow, accusing Tehran of violating a signed agreement.

President Donald Trump declared Sunday that the United States would launch military strikes against Iran "tonight and tomorrow," accusing the country of being "extremely unreliable" and failing to comply with a signed Memorandum of Understanding. The threat marks a sharp escalation in the standoff over the Strait of Hormuz, where Iran has attacked commercial vessels and claimed control over the waterway that handles about a fifth of global oil and natural gas trade.

"Iranians are extremely unreliable. We're going to hit them hard tonight. Tonight and tomorrow we will strike Iran severely," Trump said, according to a transcript of his remarks. The president asserted that Iran had not adhered to the terms of the MoU, though he did not specify which provisions were violated. The interim deal, brokered earlier this year, was intended to set up talks for a permanent end to hostilities that began in late February after the killing of late Supreme Leader Ayatollah Ali Khamenei.

"The era of one-sided deals is over," Mohammad Bagher Qalibaf, speaker of Iran's Parliament and a main negotiator, said in response. "We told you: keep your word or pay the price. Reality is knocking."

The US military has already conducted several waves of strikes on Iranian soil, hitting about 140 targets including missile and drone launch sites, ammunition dumps and communication equipment in the past week alone, according to the Pentagon. Iran retaliated by attacking nations across the Middle East that host US military forces, including Bahrain, Kuwait, Qatar, Jordan and Oman. Missile alert sirens sounded at dawn Monday in Bahrain, home to the US Navy's 5th Fleet.

Brent crude traded at $78.31 a barrel as of 6 a.m. Eastern Time Monday, down $1.08 from Friday but up about 10 percent from a year ago. The price has fallen 11.6 percent from a month ago, when it stood at $88.60, as traders priced in a potential easing of supply disruptions. The last time the US and Iran were at a similar level of confrontation in early 2020 — following the US drone strike that killed General Qassem Soleimani — Brent crude spiked above $70 before retreating within weeks as diplomatic channels reopened.

The Strait of Hormuz remains the central flashpoint

Iran's paramilitary Revolutionary Guard has insisted it alone must control the strait and has threatened to charge vessels for passage. While Iran has declared the waterway closed, the US military and Trump have asserted it remains open, with the Navy providing support to vessels moving along a southern route hugging Oman's coastline. That alternative route has drawn repeated Iranian attacks.

The standoff has already reshaped global energy flows. Oil prices spiked to $120 a barrel during the initial weeks of the conflict in February and March before retreating as the US Strategic Petroleum Reserve released crude and alternative shipping routes were established. The current risk premium embedded in crude prices reflects uncertainty over whether the strait — through which about 17 million barrels of oil pass daily — can remain open to commercial traffic.

United Nations Secretary-General Antonio Guterres warned that a return to full-scale hostilities would have "catastrophic consequences." Mediators including Pakistan, Qatar and Egypt have continued efforts to reach a final agreement, though Trump suggested last week that the interim deal was "over." Iran's new supreme leader, Ayatollah Mojtaba Khamenei, vowed in his first public statement Saturday that Iranians would avenge his father's killing.

Gold, a traditional safe haven, has gained about 8 percent since the conflict reignited, while the US dollar index has strengthened as investors seek safe-haven assets. Defense sector stocks have outperformed the broader S&P 500 by roughly 12 percentage points over the same period, according to data compiled by Bloomberg.

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