A full-blown war between the United States and Iran could, in a worst-case scenario, send oil prices soaring and cause an economic downturn.
With a massive U.S. military buildup underway in the Middle East, President Donald Trump signaled Thursday that he will decide in the next 10 days whether to launch strikes against Iran.
“This Iranian situation just scares the daylights out of this market consistently,” John Kilduff, founder of Again Capital, told CNBC. “There will be some mischief made by Iran and that’s what the market is pricing in.”
Trump has warned Iran that an attack would be “far worse” than the limited U.S. airstrikes that targeted its nuclear facilities last June, but has also left open the possibility that negotiations could still hammer out a deal governing Iran’s nuclear program.
Oil prices have risen nearly 6% this week as traders price in the growing risk of military action. The market’s biggest fear is that war would disrupt oil flows through the Strait of Hormuz.
