On Wednesday, July 8, Donald Trump appeared to sever the diplomatic thread with Iran, effectively pulling the trigger on a sharp surge in oil prices and a notable decline in global stock markets. Speaking on the sidelines of the NATO Summit, Trump stated: “As far as I’m concerned, it’s over… It’s a waste of time negotiating with them,” referring to ongoing talks with Iran. Oil prices immediately spiked, a move that had already been building momentum following the exchange of strikes between the United States and Iran in the Gulf. “Geopolitical risks are intensifying this morning,” commented Kathleen Brooks, analyst at XTB.
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The scale of the price increases
The price increases that followed Trump’s statements were anything but negligible. Around 12:40 p.m. Greek time, the price of a North Sea Brent crude barrel for September delivery jumped 6.32% to $78.85. Its American counterpart, the WTI crude barrel for August delivery, rose 6.29% to $74.87. Yields on 10-year US Treasury bonds climbed to a one-month high of 4.56%, while in Europe, yields on German and Italian 10-year bonds rose earlier to 3.06% and 3.9%, respectively.
The European stock index STOXX 600 recorded earlier losses of 1.6%, heading toward its steepest single-day decline since the peak of the Iran conflict in mid-March. “Investor sentiment was already shaken at the open following the overnight exchange of strikes between the US and Iran. But Trump’s comments lit the fuse,” said Neil Whilson of Saxo Markets. At 12:40 p.m. Greek time, Paris was down 2.06%, Frankfurt fell 2.28%, and London declined 1.54%.
