US stock market had a muted opening with oil prices showing gains on Monday. Investors are keeping a close watch on the situation in the Strait of Hormuz. All three leading indices are slightly green and looking weak in the opening hour of the trade.
US launched strikes on three Iranian nuclear sites over the weekend, fueling a fresh spike in oil prices and stoking fears of broader conflict in the Middle East.
The move was unexpected, as President Donald Trump had declared on Friday that he would decide on a possible strike “within the next two weeks,” raising expectations for a diplomatic window.
Following the attack, Trump stated on Saturday that “there will be either peace, or tragedy for Iran far greater than we have witnessed over the last eight days.”
Investors are waiting for Iran’s next move after its parliament reportedly approved the closure of the Strait of Hormuz, through which roughly one-fifth of the world’s oil supply passes.
Still, many believe that blocking the Strait would be detrimental to Iran, which relies on oil exports to its main consumer, China. About 20% of the world’s oil passes through the Strait of Hormuz, the sole marine route connecting the Persian Gulf to the open ocean.
Three empty oil and chemical tankers have diverted away from the Strait of Hormuz and changed course, Marine Traffic ship tracking data showed on Monday, amid growing uncertainty over whether Iran will take reprisal action in the vital waterway after U.S. airstrikes on Tehran’s nuclear facilities, reported Reuters.
Markets are now prepared for possible reprisal from Tehran, such as strikes on US forces in the region or disruptions to global oil flows through the Strait of Hormuz. Last week, major indices closed little changed as investors remained cautious amid rising geopolitical tensions and economic uncertainty.
Iran’s parliament allegedly approved the closure of the Strait of Hormuz on Sunday, a significant step following the United States’ strikes on Iranian nuclear sites, putting the nation in danger of offending its neighbors and trading partners.
In the first quarter of 2025, Iran shipped 1.5 million barrels per day through the Strait of Hormuz, according to data from the U.S. Energy Information Administration.
A closure would also upset Iran’s Asian market, especially China, which purchases the majority of Iran’s oil exports.