Donald Trump brushed aside Iran's demand that the United States pay for damage caused by months of conflict, a stance that coincided with a sudden reversal in oil price gains on Tuesday.
Oil market reaction
Brent crude, which had climbed about 2.5% earlier in the session, finished the day at $87.61 a barrel, a few pennies lower. The U.S. benchmark crude rose modestly to $82.19 a barrel. The brief rally followed a day when oil jumped more than 5% after Trump publicly scoffed at the Iranian demand.
Major U.S. oil producers such as Chevron, ExxonMobil and ConocoPhillips saw their shares hold steady after surging 4.5% on Monday.
Why it matters
The Strait of Hormuz, a narrow waterway through which roughly a fifth of the world's oil passes, remains a flashpoint. Uncertainty over when it will reopen to unrestricted traffic keeps global supply outlooks volatile, influencing fuel costs for consumers and businesses alike.
Higher oil prices have already pushed the average U.S. gasoline price above $4 a gallon. The motor club AAA reported the national average for regular gasoline rose to $4.01 overnight. Elevated fuel costs ripple through the economy, raising transport and production expenses that are often passed on to shoppers.
Broader market outlook
Wall Street opened modestly lower in pre-market trading. Futures for the S&P 500 edged up 0.1%, while Dow Jones futures slipped 0.1% and Nasdaq futures rose 0.3%.
The main focus for investors this week is the U.S. inflation report due on Wednesday. Economists expect the July rate to ease to 3.4% from 3.5% in June, which could reduce pressure on the Federal Reserve to raise interest rates further.
Higher rates would help curb inflation but also increase borrowing costs for households and firms, potentially dampening economic growth and affecting equity valuations.
European market snapshot
In Europe, the French CAC 40 slipped 0.1%, Germany's DAX inched up 0.1% and Britain's FTSE 100 remained flat. Asian markets showed mixed moves, with South Korea's Kospi gaining 0.7% after a 4.1% jump in Samsung Electronics shares, while Hong Kong's Hang Seng fell 1.1%.
Broadly, for the Korean memory chipmakers, the past year's chip mania could well be over, even though Korean chipmakers will continue to benefit from the massive AI build out,
said Ipek Ozkardeskaya, senior analyst at Swissquote. The comment reflects a cooling of the recent frenzy that had driven Asian equities higher on expectations of AI-related profit boosts.
What comes next?
Investors will watch the upcoming U.S. inflation data for clues on the Federal Reserve's policy path. A softer reading could ease market anxiety over higher rates, while a stubbornly high figure may keep pressure on central banks to tighten further.
Meanwhile, any development regarding the reopening of the Strait of Hormuz will continue to sway oil markets, with potential knock-on effects for European energy prices and broader economic sentiment.