Market Wire: Oil prices surge and the dollar climbs after Trump threatens to take Iranian territory

Oil prices are surging and the dollar is extending its advance after President Trump threatened another round of military strikes on Iran—and appeared to suggest that American ground forces could be directed to seize facilities handling the overwhelming majority of the country's crude exports. Trump has historically stopped short of threatening to put US boots on the ground.

“The United States will be hitting Iran (Whose Navy, Air Force, Radar, Anti Aircraft, and all other forms of Defense, together with most of its offensive capability, are GONE!), VERY HARD TONIGHT”, he said. “At some point in the not too distant future, we will be taking Kharg Island, and other oil infrastructure points, and assume total control of their Oil and Gas Markets, much like we have with Venezuela, which is working out brilliantly for both Venezuela and the United States of America”.

Currency markets could suffer some turbulence in the hours ahead as the president’s post reinforces the haven bid that has supported the dollar through the conflict, with the Swiss franc and gold also likely to attract flows. Oil-linked currencies—the Norwegian krone and Canadian dollar in specific—stand to gain if crude spikes on fears of retaliation against Gulf energy infrastructure or further disruption in the Strait of Hormuz. In contrast, the currencies of large oil importers—the Japanese yen, euro, and British pound—could come under renewed selling pressure as energy bills rise.

However, after dozens of escalatory cycles in recent months, traders are likely to avoid placing large directional positions, and moves could prove somewhat muted until military operations get underway.

A “boy who cried wolf” dynamic is firmly in place across global financial markets—but sometimes, wolves really do arrive.