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Futures, Bonds Tumble, Oil Surges After Middle East Attacks Resume

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Summary

  • Equity Futures Tumble, Oil Surges On Fresh Middle East Strikes 
  • US forces carried out airstrikes on an Iranian military site and imposed new sanctions to prevent Tehran from profiting from vessels transiting the Strait of Hormuz. In response, Iran targeted the American airbase from which the attack originated, according to a Tasnim report, which cited the Islamic Revolutionary Guard Corps. Kuwait also said it’s responding to hostile missile and drone threats
  • New US strikes in Iran reported, after Iranian drone intercepts in Hormuz area.
  • Trump red line (PBS): “No, no, not at all. Not sanctions relief, no” – unless Iran gives up its enriched uranium. “Iran negotiating on fumes,” Trump says in cabinet meeting.
  • White House rejects ‘complete fabrication’ of Iranian TV reporting on MOU and draft deal status.
  • IRGC keeping up the rhetoric: warns that Iran would “turn the area from Chabahar to Mahshahr into a graveyard for aggressors” if the ceasefire collapses.
  • CENTCOM: “Clearly the Iranians are trying to hedge their bets here and put more pressure on the US.”
  • Iranian president: “The main battleground today is the economic war.“
  • Tabriz International Airport in northwestern Iran– which sustained heavy damage from airstrikes during the peak of the aerial bombings – is officially operational again, bringing restored airports to 20 reopened.
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Equity Futures Tumble, Oil Surges On Fresh Middle East Strikes

Stocks and bonds fell while oil surged after fresh attacks in the Middle East returned amid conflicting signals from the US and Iran on a deal to end the war.  The MSCI All Country World Index, the broadest measure of global equities, retreated from a record high and dropped 0.4%. A gauge of Asian shares slumped 1.7%. Futures for the S&P 500 slumped 0.5%, and the Nasdaq 100 retreated 0.8%, while contracts for European stocks also pointed to a weaker open. Brent surged to $98 while WTI also traded almost $3 higher above $92 on the news.

The escalation started after US forces carried out airstrikes on an Iranian military site and imposed new sanctions to prevent Tehran from profiting from vessels transiting the Strait of Hormuz.

In response, Iran targeted the American airbase from which the attack originated, according to a Tasnim report, which cited the Islamic Revolutionary Guard Corps. 

Adding to the tensions, Kuwait said it was responding to hostile missile and drone threats. The nation’s army said in a social media post that “any explosions that may be heard are the result of air defense systems intercepting hostile targets.”

An American official described the attacks as defensive, saying the US intends to maintain the ceasefire that began last month. The official said US Central Command forces had shot down a quartet of one-way Iranian attack drones that were fired at a commercial ship and also struck another Iranian drone-launching unit in Bandar Abbas, near the strait.

The dollar strengthened for a third consecutive day, while gold fell 1.5% to below $4,400 an ounce. Treasuries dropped as higher oil prices stoked inflation concerns, with the yield on the benchmark 10-year climbing four basis points to about 4.53%. 

Earlier, the US Treasury said it took action against Iran’s Persian Gulf Strait Authority, accusing it of launching a new attempt “to monetize its campaign of state-sponsored terror by extorting vessels transiting the Strait of Hormuz.”

*  *  *

Fresh US Strikes on Iran amid Deal Stalemate

There are reports of new late night/early morning (local time) military strikes by the US over Iran. The US military carried out new strikes inside Iran after intercepting multiple Iranian drones, according to Reuters. An American official said the targeted Iranian military site was assessed to pose a threat to both American forces and commercial shipping operating near the Strait of Hormuz.

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Reuters further reported that the intercepted drones had been launched from Iran, marking another escalation in tensions as Washington moves to counter perceived threats to regional maritime traffic and its military presence.

Just prior to this confirmation, CNN described mystery explosions along Iran’s coast:

Three explosions were heard to the east of Bandar Abbas, a strategic Iranian port city and naval base near the Strait of Hormuz, Iran’s semi-official Fars News Agency reported in the early hours of Thursday.

The blasts were reported at around 1:30 a.m. local time and caused the air defense systems of Bandar Abbas to be briefly activated, according to Fars, a media outlet with links to Iran’s Islamic Revolutionary Guard Corps (IRGC).

This suggests things could return to full-blown military conflict once again, though the rhetoric from either side has been restrained, and at times even optimistic that a final deal could still be achieved.

More from Trump Cabinet Meeting

The president has said that under a framework deal, the Straight of Hormuz would open immediately; however, the Iranians are now insisting the IRGC has control of the vital oil transit waterway. Below is a short round-up of some of the more interesting latest statements from Trump, during a televised cabinet meeting at the White House.

  • TRUMP: STRAIT OF HORMUZ WILL BE OPEN TO EVERYBODY
  • TRUMP: WE’LL WATCH OVER STRAIT OF HORMUZ
  • TRUMP: OMAN WILL BEHAVE OR WE’LL HAVE TO BLOW THEM UP
  • TRUMP ON IRAN: WHEN THEY BEHAVE WE’LL LET THEM HAVE THEIR MONEY

Trump Red Line

President Trump has reasserted his ‘red line’ for negotiations, centered on enriched uranium and the nuclear issue:

President Donald Trump said on Wednesday that Iran would not get sanctions relief in exchange for giving up their highly enriched uranium. His comments come as the United States and Iran try to strike a deal to end the conflict that has engulfed the Middle East for the last three months.

“No, no, not at all. Not sanctions relief, no,” Trump told PBS News during a short phone call when asked if the current deal would mean that Iran would give up their highly enriched uranium in exchange for sanctions relief.

Trump also in a televised Wednesday afternoon cabinet meeting said Iran is “intent on a deal” but that “Iran is negotiating on fumes.“

White House Rejects ‘Complete Fabrication’ Of Iran TV MOU Contents

The Trump administration has denied the morning Iranian state media reports on the contents of a current ‘Memorandum of Understanding’ (MOU) – which curiously had left out any reference whatsoever to the fate of Iran’s enriched uranium…

  • WHITE HOUSE: NOBODY SHOULD BELIEVE IRAN STATE MEDIA REPORTING
  • WHITE HOUSE CALLS REPORTED IRAN MOU A ‘COMPLETE FABRICATION’

An official underscored that it is a “complete fabrication” – and so it seems we are yet again back at square one, as Tehran has also said it is only engaged in ‘indirect’ contact with Washington at this point. There are further reports in US media that the Pentagon has drawn up a new target list, and has acknowledged that the Iranians have been able to better hide their missile launch sites. 

Also emerging are ambiguous reports of some kind of potential explosion incident at a petrochemical complex at Asaluyeh, in Iran’s Bushehr province.

US side denounces Iranian state media reporting on current MOU draft and status:

Oil Dumps on MOU Headlines

As for the status of talks, the below headlines present the latest (and noticeably absent is the enriched uranium question, or release of Iranian funds). Bloomberg summarizes: “An unofficial draft of a US-Iran interim peace deal says maritime traffic through the Strait of Hormuz can return to normal within a month of the agreement being finalized, according to Iranian state television.
It’s unclear how recent the draft, reported by IRIB News, is or whether the US has agreed to the terms.”

  • Iran’s state TV says it has a draft of the initial unofficial framework for MOU with US
  • According to draft MOU US military forces will withdraw from vicinity of Iran and lift naval blockade
  • Iran’s state TV says in return, Iran has committed to restoring the number of commercial transit ships through Hormuz Strait to pre-war levels within one month
  • Iran’s state TV says military vessels are not included in this draft agreement
  • Iran’s state TV: A final agreement will be approved as a binding UN Security Council resolution if reached in 60 days.
  • The Islamabad memorandum framework is still in progress, stating no action will be taken by Iran without “tangible verification.”
  • If a final deal is reached within 60 days, this agreement will be approved in the form of a binding UN Security Council resolution.
  • The management and route of ship traffic through Strait of Hormuz will be handled by Iran in cooperation with Oman.
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Oil dumping on the headlines:

As usual, there remains a basis for skepticism:

Iran Vows ‘Graveyard For Aggressors’ amid ‘Indirect’ US Contacts

Tehran is keeping the war rhetoric cranked to a maximum, but is also conceding that a return to full-scale war with the United States and Israel is ‘unlikely’ at this stage. The Islamic Republic says at this moment only ‘indirect’ contact with Washington is happening, as cited in Bloomberg.

The IRGC is seeking to dismantle any assumption that Iran is entering peace talks from a position of tactical submission. Speaking to the semi-official Tasnim news agency, Mohammad Akbarzadeh – the political deputy of the IRGC Navy – warned that any resumption of US kinetic activity would result in catastrophic casualties for Western forces.

Akbarzadeh touted that the armed forces remain at a level of total readiness, threatening that Iran would “turn the area from Chabahar to Mahshahr into a graveyard for aggressors” if the ceasefire collapses. “Our fighters today carry in their chests the urge for hand-to-hand battle with the enemy,” Akbarzadeh declared, writing off the prospect of a renewed Western assault due to what he assessed as the “weakness” of the American-led coalition.

Pentagon: Iran ‘Hedging its Bets’ in Hormuz Strait

The Pentagon has acknowledged that Iran is ‘hedging its bets’ amid Hormuz tensions:

Former CENTCOM Commander Gen. Joseph Votel said Iran’s reported effort to lay mines in the Strait of Hormuz suggests Tehran is “hedging its bets” and attempting to ramp up pressure on the U.S. amid ongoing negotiations.

“Clearly the Iranians are trying to hedge their bets here and put more pressure on the U.S., and what we saw here was CENTCOM detecting that and then taking military action to address it very, very quickly,” Votel said during a Tuesday appearance on Fox News’ “America Reports.”

Iranian source to DropSite:

“If the U.S. cannot give the money that belongs to Iran back to Iran, and the U.S. cannot put a leash on Netanyahu and stop him from going on a rampage in Lebanon, then it shows that this conflict has not ended,” Izadi says. “This is a test for Iran to see what’s going on with the other side.”

Enriched Uranium Not on the Agenda

And all the while Iranian leaders have continued to make clear they will not bow to the central Trump administration demand of transferring Iran’s highly enriched uranium out of the country – though there were prior unconfirmed reports that China could be an acceptable destination for some Iranian officials.

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Speaking from the sidelines of an international security conference in Moscow, Ali Bagheri Kani, deputy secretary of the Supreme National Security Council, bluntly told Fars news agency: “This issue is not on the agenda of the negotiations.”

Iranian President Masoud Pezeshkian in fresh remarks is signaling that the conflict has simply migrated from an air and sea war to the global financial system.

Pezeshkian: Main Battleground Now the Economic War

Meeting with the Tehran Chamber of Commerce on Wednesday, Pezeshkian urged a structural overhaul of the country’s domestic market, calling for an immediate expansion of the private sector to act as an economic shield.

“The main battleground today is the economic war,” Pezeshkian stated, according to Tasnim. “We believe the more capable, agile, and active the private sector is, the stronger the country’s economic foundation will become, and the greater our national power will be in the face of external pressures and threats.”

Pezeshkian framed the Western shift toward sanctions and capital starvation as an admission of military failure by Washington and its Israeli ally. “After failing to achieve its objectives on the military front, the enemy has focused on damaging the country’s economic resilience and disrupting the livelihoods of the people,” the president added.

Indeed this is obviously what the US naval blockade on Iranian ports aims to accomplish, which Washington continuing to bet on some kind of mass anti-regime uprising, which has yet to materialize since the start of Operation Epic Fury.

20 Damaged Airports Across Country Reopened

To demonstrate its resolve and resiliency even while Washington tries to keep the economic chokehold on, Iranian civic workers continue to rebuild logistical infrastructure at rapid pace.

As the latest example, on Wednesday the Civil Aviation Organization announced that Tabriz International Airport in northwestern Iran- which sustained heavy damage from airstrikes during the peak of the aerial bombings – is officially operational again.

“The gateway to northwest Iran”…

According to public broadcaster IRIB, domestic technical teams managed to bypass supply chain bottlenecks to restore the facility to full service. “Tabriz Airport, which was attacked during the recent war, has now been restored to activity by Iranian specialists and will reopen on Wednesday,” a spokesperson confirmed.

Tabriz joins a growing list of critical transit hubs rushing to normalize operations, according to Al Jazeera, while state media reports state that the total number of reopened airports across the country has now reached 20. 



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