Global markets tumbled further on Wednesday despite Donald Trump’s offer to have the US navy escort tankers through the strait of Hormuz and the US military’s claim that there is “not a single Iranian ship underway” in the crucial waterway.
The Middle East conflict has crippled the strait which was in effect closed by Iran after strikes by the US and Israel this weekend, raising fears of a sustained energy supply crisis that reverberated around the world.
David Solomon, the chief executive of Goldman Sachs, cautioned it would take “a couple of weeks” for markets to process the impact of the US-led military operation in the region.
As Asian stock markets came under fresh pressure on Wednesday, trading in Seoul was suspended as South Korea’s benchmark Kospi share index fell by as much as 11.3%, before pulling back to trade down 7.7%. Japan’s Nikkei 225 fell 3.9% in Tokyo.
Oil prices, which have surged in recent days, continued to climb.
The US military has destroyed 17 Iranian ships, including a submarine, since Saturday, Brad Cooper, commander of the US Central Command, said late on Tuesday. “Today, there is not a single Iranian ship underway in the Arabian Gulf, Strait of Hormuz, or Gulf of Oman,” he said in a video statement.
Shipping through the strait of Hormuz – typically a vital artery of the world economy, with about a fifth of oil supplies and seaborne gas tankers passing through it – has largely ground to a halt.
Trump sought to mitigate fears of long-term disruption to the global oil market on Tuesday, suggesting that the US military stood ready to protect ships moving through the strait, and political risk insurance “at a very reasonable price” to vessels navigating the Gulf.
“If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible,” the US president wrote on his Truth Social platform. “No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD.”
Brent crude, the international benchmark for oil, has soared this week as investors braced for significant disruptions to supply. The benchmark, which closed at its highest level since January 2025 on Tuesday, rose by a further 1.4% on Wednesday to hit $82.53 per barrel.
The United Kingdom Maritime Trade Operations said it had received reports of incidents affecting ships near the United Arab Emirates and Oman on Tuesday, amid heightened apprehension around threats to vessels in the region.
Wall Street was set to open lower in New York on Wednesday, according to pre-market trading data. Trump is known to closely monitor the performance of leading US stock markets, regularly claiming their rallies as evidence of his administration’s success.
“I’m actually surprised that the market reaction has been more benign given the magnitude of this,” Solomon said in a speech in Sydney on Wednesday, noting that markets typically react in a muted way to geopolitical events unless they have direct consequences for economic growth.
“I think it’s gonna take a couple of weeks for markets to really digest the implications of what has happened, both in the short term and medium term,” added Solomon. “And I can’t speculate as to how that would play out.”
Reuters contributed to this report
