Stocks soared Monday morning and oil prices slid more than 5% after President Trump over the weekend announced new peace talks with Iran and called off “massive” attacks on the nation.
The Dow Jones Industrial Average surged 586 points, or 1.1%, by about 9:50 a.m. ET while the S&P 500 and Nasdaq jumped 0.7% and 0.9%, respectively.
Brent crude oil prices plummeted 5.7% to $82.93 a barrel while West Texas Intermediate crude fell 7.2% to $78.55 – though national average gasoline prices, which typically lag oil by one to two weeks, remained stubbornly above $4 a gallon.
Speaking to reporters Sunday, Trump said new Iran peace talks would start Monday as he called off “massive” planned attacks on the nation following appeals from several Gulf state allies.
“I was asked to by Saudi Arabia, by UAE, by Qatar, and by Iran,” he told reporters aboard Air Force One when asked why he aborted the strikes. “We were all set to go.”
But Trump said the Saudi crown prince assured him that Iran was ready to make a deal including agreements on its nuclear program and the Strait of Hormuz, a vital maritime route for global oil supplies that has been blockaded for months amid the war.
The Iranian government on Monday flat-out rejected Trump’s claims, with officials stating that no talks with the US were taking place or scheduled.
But traders were hopeful for a permanent peace deal as they sought to stabilize markets on the first trading day of the new month, after a particularly volatile July.
The Trump administration has been eager to mollify Americans’ concerns about rising energy prices ahead of the midterm elections – and a permanent deal to reopen the strait would certainly help, experts say.
In the meantime, officials are reportedly considering reopening defunct petroleum refineries from the Virgin Islands to California in an effort to tamp down prices at the pump, according to a Politico report last week.
White House officials have held talks with the US Environmental Protection Agency on the necessary regulatory requirements for reopening long-shuttered facilities, the report said.
Last week, ExxonMobil and Chevron reported blowout quarterly earnings of $14.5 billion and $12 billion, respectively, as the Iran war has pushed oil prices higher than $100 a barrel at times.
The oil majors warned that fuel prices were likely to remain high for some time if the Middle East conflict continues to deplete oil reserves.
Despite raking in multibillion-dollar windfalls, American oil majors are reluctant to ramp up drilling because they are fearful of political backlash – instead insisting that the bumper profits are just a temporary boost.
Meanwhile, investors are awaiting the Bureau of Labor Statistics’ jobs report, scheduled for release on Friday, as they weigh conflicting comments from Federal Reserve officials – who have largely argued for the need to tamp down inflation while refusing to raise interest rates.