Trump's Oman Bomb Threat Lifts Oil, Gold 1% as Iran Deal Expires

President Donald Trump threatened to bomb Oman over the Strait of Hormuz, lifting WTI crude 0.1 percent to $82.51 a barrel and gold futures 1 percent to $4,481.20 an ounce as the US-Iran peace agreement deadline expired.

"If Oman gets in the way, we'll bomb the s--t out of them," Trump told Fox News' Trey Yingst in a phone interview Monday, hours after the 60-day memorandum of understanding between Washington and Tehran lapsed. A senior Iranian official told Reuters that Tehran has shifted its policy from a defensive posture to a "full offensive" stance because no consensus was reached on permanently ending the war.

The Nasdaq Composite held near flat at 26,718.2 points as tech shares gained on reports that Anthropic's second-quarter revenue surged at least 14-fold year-over-year to exceed $11.5 billion. The S&P 500 slipped 0.2 percent to 7,770.7 points, while the Dow Jones Industrial Average fell 0.4 percent to 53,545.8 points. Memory chip maker Sandisk jumped as much as 9.1 percent intraday. The 10-year Treasury yield rose 1 basis point to 4.71 percent, while the 2-year yield fell 1 basis point to 4.17 percent.

The Strait of Hormuz carries roughly one-fifth of global oil consumption, and any disruption to shipping through the waterway could push energy prices sharply higher, intensify inflationary pressures, and complicate the Federal Reserve's monetary policy path. Iran has said the strait will only reopen with a new toll system, which the US opposes, while Oman has signaled openness to collecting "voluntary" fees from transiting vessels.

Iran Shifts to 'Full Offensive' Posture

Iran's Foreign Ministry spokesperson Esmaeil Baghaei said Tehran and Oman reached an "understanding" on Monday regarding future shipping routes through the strait. However, the senior Iranian official's statement to Reuters suggested the breakdown of broader peace negotiations has hardened Tehran's position. The latest round of fighting began last month when Iran attacked three ships using a US-preferred shipping route along the Omani coast, rather than an Iranian-designated route.

Trump's threat against Oman is not new — he warned in May that the US would "blow up" the Arab nation if it failed to "behave" over the strait. Oman, a US ally, had served as a mediator between Washington and Tehran before the war, hosting unsuccessful peace talks on its own territory and in Switzerland. The escalation follows a pattern of escalating rhetoric from the White House, with Trump telling reporters in the Oval Office Monday that "I don't think [Oman] behaved very well, but we'd handle them very easily, just like we do others."

Economic Data Beats Expectations

On the data front, the National Association of Home Builders reported its August housing market index rose to 35 from 34 in July, beating the consensus estimate of 33 and exceeding the 32 reading from the same period last year. The New York Federal Reserve's Empire State manufacturing index surged to 20.6 from 15.6 in July, far exceeding the 10.0 expected by economists — the first manufacturing data release for August showing marked acceleration in the New York region.

What's at Stake

The shipping security situation in the Strait of Hormuz warrants particular attention. Approximately one-fifth of global oil consumption passes through the strait, and if the conflict escalates and disrupts passage, it could drive up global oil prices, intensify inflationary pressures, and have a cascading effect on the Federal Reserve's monetary policy trajectory. Trump also said Friday he plans to declare the Strait of Hormuz "a territory of the United States" after the war, and told reporters Monday he is "in no hurry" to reach a deal with Iran.

Brent crude futures gained 0.4 percent to $88.86 a barrel, while silver futures climbed 2.1 percent to $66.51 an ounce, reflecting broad safe-haven demand. The market now faces a tug-of-war between strong AI-driven tech fundamentals and escalating geopolitical risk, with investors simultaneously chasing growth in momentum stocks while building defensive positions in gold and other safe-haven assets. If the conflict escalates further, energy prices could push headline inflation higher, potentially forcing the Fed to reconsider its easing trajectory — a scenario that would pressure both equities and bonds simultaneously.

This article is for informational purposes only and does not constitute investment advice.