Stock futures tumbled and oil prices jumped on Sunday after hopes that the Strait of Hormuz would fully reopen were deflated over the weekend by renewed gunfire.
Futures tied to the Dow Jones industrial average fell 407 points, or 0.82%. S&P 500 futures were down 0.67%, and Nasdaq futures lost 0.57%.
U.S. oil futures jumped 7.14% to $89.94 a barrel, and Brent crude climbed 5.9% to $95.71. Gold fell 1.6% to $4,801.40 per ounce.
The U.S. dollar was up 0.2% against the euro and rose 0.25% against the yen. The yield on the 10-year Treasury was flat at 4.248%.
On Friday, President Donald Trump and Iran’s foreign minister announced that ship traffic in the narrow waterway was completely free, sinking oil prices and triggering a massive stock rally that sent the S&P 500 to fresh highs.
But Trump also said the U.S. naval blockade on Iran would remain in place until a deal is finalized, and the Islamic Revolutionary Guard Corps said it still controls the strait.
By Saturday, the IRGC declared that Hormuz was closed again to all vessels, regardless of type or national origin. Ships also reported coming under attack from projectiles and small boats, likely Iran’s “mosquito fleet.”
Tensions in the Persian Gulf escalated further on Sunday, when the U.S. Navy seized a ship for the first time as part of its blockade, with a destroyer firing at a vessel attempting to evade the dragnet.
A statement from U.S. Central Command said the guided-missile destroyer U.S.S. Spruance intercepted the Iranian-flagged M/V Touska as it transited the north Arabian Sea en route to Bandar Abbas on the Iranian coast, sending multiple warnings that it was violating the blockade.
But after the Touska didn’t comply over a six-hour period, the Spruance ordered the vessel to evacuate its engine room and fired several rounds from the destroyer’s five-inch gun, disabling the propulsion system, the statement said.
“Motor vessel Touska, motor vessel Touska—vacate your engine room, vacate your engine room,” sailors aboard the Spruance said, according to a video clip released by Central Command. “We’re prepared to subject you to disabling fire.”
On social media, Trump said the Navy “stopped them right in their tracks by blowing a hole in the engineroom,” adding that the Touska was under U.S. Treasury sanctions because of its prior history of illegal activity.
Central Command added that Marines from the 31st Marine Expeditionary Unit later boarded the Touska, which remains in U.S. custody.
The operation came after Marines have been practicing maritime raids in recent days. Meanwhile, other signs of combat operations emerged as the Navy conducted mine-clearing operations with drones.
Still, Trump kept the door open to diplomacy by sending envoys to Pakistan to resume talks with Iran. But as of Sunday evening, Tehran had yet to confirm any of its diplomats would attend.
Meanwhile, IRGC-affiliated state media warned Iran is prepared for the possibility of resuming the war and listed critical targets near the Red Sea, in Saudi Arabia, and in the UAE.
“Therefore, Iran is prepared to, with the reconstructions and preparations it has undertaken over the past two weeks, cement unforgettable hellish hours right from the outset of renewed conflict with America and Israel,” Tasnim News said. “Additionally, an analysis of Iran’s positions shows that if the war begins and infrastructure is targeted once again, Iran will completely abandon the restraints it exercised in the first round of the war regarding Bab al-Mandab, Aramco, Yanbu, and Fujairah.”
