U.S. Navy destroyers fired on and seized an Iranian-flagged cargo ship in the Gulf of Oman on Sunday, triggering a sharp reversal in global markets just days after a U.S.-Iran ceasefire had sent stock indexes to record highs and oil prices tumbling.
The seizure of the M/V Touska, which U.S. Central Command said was attempting to evade a naval blockade, marked the first direct use of force under the renewed U.S. Maritime interdiction campaign. After issuing multiple warnings over six hours, the USS Spruance disabled the vessel’s propulsion with 5-inch gunfire, then boarded it with Marines from the 31st Marine Expeditionary Unit. President Donald Trump confirmed the action on Truth Social, stating the Navy “stopped them right in their tracks by blowing a hole in the engineroom” and reiterating that the ship was under Treasury sanctions due to prior illegal activity.
The move came despite Iran’s declaration days earlier that the Strait of Hormuz had reopened following a U.S.-brokered ceasefire with Lebanon. By Saturday, but, the Islamic Revolutionary Guard Corps had declared the strait closed again to all vessels, citing U.S. Failure to meet obligations under the agreement. State media reported restricted traffic, while commercial ships described coming under attack from small Iranian boats — likely the so-called “mosquito fleet” — using projectiles to harass transits.
Markets reacted instantly. Dow Jones futures fell 407 points, or 0.82%, on Sunday night according to Fortune, while S&P 500 and Nasdaq futures dropped 0.67% and 0.57% respectively. CNBC reported slightly lighter losses in early Monday trading — Dow futures down 254 points (0.5%), S&P 500 off 0.4% — but the direction was clear: the relief rally that had lifted the S&P 500 4.5% and the Nasdaq 7.2% the prior week was unraveling. The Nasdaq had just closed its 13th consecutive winning session, a streak not seen since 1992, leaving investors overbought and vulnerable to negative headlines.
Oil prices surged in tandem. West Texas Intermediate futures jumped 8% to $90.54 per barrel and Brent crude rose 6% to $96.50, erasing Friday’s declines after the ceasefire announcement. Gold slipped 1.6% to $4,801.40 an ounce, the dollar gained marginally against the euro and yen, and the 10-year Treasury yield held steady at 4.248%.
European bourses opened lower on Monday, reflecting the same unease. London’s FTSE 100 dropped 42 points (0.4%) to 10,626, Germany’s DAX fell 1.3%, and Italy’s FTSE Mib declined 1.1%. Chris Beauchamp of IG described the shift as “Friday’s euphoria giving way to confusion,” noting that while markets still clung to hopes of renewed talks in Pakistan, “a clear way out of the crisis is still impossible to foresee.”
Even as tensions flared, diplomatic channels remained nominally open. The White House confirmed envoys had been sent to Pakistan to revive negotiations, though Tehran had not confirmed attendance by Sunday evening. Trump continued to insist the naval blockade would remain until a deal was finalized, while simultaneously threatening to destroy Iranian power plants and bridges if no agreement emerged — a contradiction that underscored the volatility of U.S. Positioning.
The humanitarian and economic ripple effects were already visible in the UK. Petrol prices had fallen 0.65p per litre since peaking on April 15, diesel by 1.06p, though both remained 18% and over a third higher than pre-conflict levels. Meanwhile, UK property asking prices rose 0.8% in April to £373,971 ($470,000), defying higher mortgage rates, with Rightmove noting the market’s “surprising resilience” — particularly at the top end, where cash buyers dominated, and in cheaper regions where smaller loans were needed.
For now, the Strait of Hormuz remains a flashpoint where military action, diplomatic overtures, and market psychology collide. Each seizure, each declaration, each flotilla of small boats rewrites the calculus of risk — and reward — for traders, navies, and governments alike.
Why did the U.S. Seize the Iranian cargo ship?
The U.S. Navy intercepted the M/V Touska as it was attempting to evade a maritime blockade enforced against Iranian-flagged vessels under U.S. Treasury sanctions. After six hours of noncompliance despite warnings, the destroyer disabled the ship’s engine and boarded it.
How did markets react to the seizure and renewed tensions?
Stock futures in the U.S. And Europe declined, oil prices jumped over 5%, and the dollar strengthened slightly — reversing gains from a recent ceasefire-driven rally that had pushed the S&P 500 and Nasdaq to all-time highs.
Is diplomacy still possible between the U.S. And Iran?
Yes, the White House has sent envoys to Pakistan to revive talks, but as of Sunday evening, Iran had not confirmed whether its diplomats would attend, leaving the prospect of negotiation uncertain.
