Trump Defends Iran War Stance, Cites Nuclear Threat to Israel

Former U.S. President Donald Trump stated he stands by his decision to initiate military action against Iran, asserting he would make the same choice today. This declaration comes as global markets price in a prolonged conflict, with Brent crude oil exceeding $108 per barrel and bond yields rising worldwide. Trump addressed the potential political cost, suggesting the action was necessary to prevent a far graver scenario where Iran obtains nuclear weapons, threatening Israel, the Middle East, and American cities.

Market participants are primarily concerned with the conflict's duration. Recent assessments indicate the campaign might extend beyond the current presidential term, significantly impacting oil prices, inflation, and interest rates. Trump, however, maintains a shorter timeline, predicting the conflict's end shortly after the midterm elections, which he expects to lower energy prices. He also refuted Iranian claims of damaging U.S. fighter jets in Jordan, confirming American assets at the base remained intact.

The economic strain on Iran is another key question. Trump expressed doubt about Tehran's ability to sustain the economic pressure, reiterating his belief that the issue would be resolved near the elections. Iran continues to sell oil, primarily to East Asian customers, often at deep discounts and through hard-to-track tanker fleets, accumulating significant revenue losses.

Washington is intensifying its economic pressure on Tehran, with the Treasury Department planning further sanctions targeting a major bank used by Iran. This follows actions that led to the closure of Dubai branches of Egypt's second-largest bank and the inclusion of Turkey's largest bank on a sanctions list for facilitating financial transfers to Iran. These measures now extend beyond Iranian banks to third-country financial institutions serving them, creating a chilling effect across financial markets in countries like Egypt, Turkey, and the Gulf states, as they risk disconnection from the U.S. dollar system.

The U.S. campaign has shifted from blocking Iranian oil exports to targeting its payment channels. As international banks become more reluctant to handle Iranian funds, the gap widens between Iran's desired oil prices and the actual revenue collected. The ongoing tension in the Strait of Hormuz and the Red Sea continues to influence energy market risk, with increased insurance and rerouting costs for tankers adding to the final price of oil. This volatility is reflected in Brent crude trading above $108 per barrel and U.S. oil near $102, with Asian markets opening lower. Bond markets are also reacting, with 10-year U.S. Treasury yields nearing 4.95% and 30-year yields reaching 5.36%, a combination that pressures growth stocks by offering lower-risk, higher returns.