Dow futures rally nearly 1,000 points, oil tumbles below $100 after Trump orders 5-day pause on attacks on Iran power plants
US stocks rallied and oil prices tumbled Monday after President Trump announced a five-day pause on plans to strike Iranian power plants – though analysts warned that prices are unlikely to completely normalize following severe damage to key Middle East energy facilities.
The Dow Jones Industrial Average soared 631 points, or 1.4%, while the S&P 500 and Nasdaq jumped 1.2% and 1.4%, respectively.
Brent crude oil futures eased 10.7% to $95.04 a barrel, down from heights last week above $119, while West Texas Intermediate crude slid 10.4% to settle at $88.01.
“The ultimate impact on the cost of oil and the price of oil is going to be driven by the length of the conflict,” Joe Adamski, managing director of ProcureAbility, a supply chain consultancy, told The Post.
If the Trump administration successfully reopens the oil chokepoint in the Persian Gulf, “then we would expect to see a return to normalcy to a degree – but we won’t get back down to the prices that we were at because of the infrastructure damage that has happened,” Adamski added.
National average gasoline prices, meanwhile, jumped to a whopping $3.96 a gallon on Monday, according to AAA, since there is a lag between oil futures and prices at the pump.
In a Truth Social post Monday morning, Trump wrote that the US and Iran have had “VERY GOOD AND PRODUCTIVE CONVERSATIONS” over the last two days, adding that he has ordered the Department of War to postpone strikes on Iranian power plants for five days.
Iran has denied holding any negotiations with the US, calling Trump’s claim “fakenews” that is being used to manipulate financial markets and oil prices.
Trump told reporters that Iran and the US are going to speak “today,” and if talks don’t go well, “we’ll just keep bombing our little hearts out” – signaling that markets could endure further volatility this week if the five-day pause doesn’t last.
“It is very difficult to tell which direction it’s gonna go in because at the moment, the market is being driven by fear,” Adamski told The Post. “There’s been recovery, but oil is still about a third higher than where it was before this [the war in Iran] started.”
Adamski estimated that even if the war ends soon, oil will not end 2026 below the high $60 range or the low $70 area.
Morningstar, meanwhile, maintained its end-year oil forecasts at $60 for West Texas Intermediate crude and $65 for Brent.
“Looking at the oil futures contracts, it’s hard to have specific takeaways because prices are just moving too fast,” Dave Sekera, chief US market strategist at Morningstar, wrote in a note Monday.
“I think investors should take a step back and consider what this all means from a long-term perspective.”
Monday marked a sharp turnaround for the stock market, which was set to see more losses ahead of Trump’s morning announcement as the war in Iran enters its fourth week.
Ahead of Monday’s bounce-back, the Dow Jones and Nasdaq each appeared poised to slip into correction territory, which is defined as a 10% drop. The Russell 2000 on Friday became the first major index to enter correction territory.
Both the Dow and Nasdaq were off nearly 10% from their record levels through Friday, while the S&P 500 had fallen about 7% from its high.
“While further downside is possible, we are likely getting closer to the end of this correction, even if the Iran conflict continues, since stocks tend to price-in these events, and eventually move onto other things,” Clark Bellin, president and chief investment officer at Bellwether Wealth, said in a note Monday.
“We do not need an end of the Iran war in order for stocks to recover from these recent declines.”
Ken Mahoney, CEO of Mahoney Asset Management, added that Monday is just the latest in a “seesaw” effect across markets as oil and stocks whiplash investors.
“Investors are hoping that we’ve seen the worst of oil,” Mahoney told The Post. “The president has done this before, tried to find an exit ramp, and for today, equity investors are happy that he did.”
Tensions heated up over the weekend as Trump gave Iran a 48-hour deadline to reopen the Strait of Hormuz, a vital maritime route for 20% of the world’s oil supply – threatening to bomb their power plants otherwise.
Tehran vowed to retaliate on any attacks on its infrastructure by targeting US energy and desalination plants, the latter of which remove salt from seawater to produce fresh drinking water.
Last week, Israel struck Iran’s South Pars gas field, and Tehran retaliated with attacks on key energy facilities in Qatar and Saudi Arabia, and ramped up attacks on ships in the Gulf.
The International Energy Agency said Monday that at least 40 critical energy assets in the Middle East – including oil and gas fields, refineries and pipelines – have been “severely or very severely” damaged since the war started on Feb. 28.
Analysts had initially expected oil and gasoline prices would fall quickly after the war ended. But oil infrastructure is complex and takes time to repair, raising concerns that prices could stay elevated for longer even if the war ends soon.