US markets saw their biggest slump since the start of the US-Israel war with Iran on Thursday as Donald Trump said the conflict’s impact on oil prices had not been as bad as he expected.
The Dow closed 450 points down, while the S&P 500 dipped 1.7%. The tech-heavy Nasdaq fell 2.3%, plunging into correction territory, which happens when an index falls at least 10% below its most recent peak.
Oil prices have surged since the start of the conflict, reaching levels not seen since Russia’s invasion of Ukraine pushed up global oil prices in 2022 and 2023. At the end of day on Thursday, Brent crude oil, the global benchmark, was about $107 a barrel while US crude hit $93 a barrel. Average US gas prices at the pump reached $3.98 a gallon, according to AAA.
Despite the soaring prices, Trump said that oil prices “have not gone up as much as I thought” during a cabinet meeting on Thursday,
“It’s all going to come back down to where it was, and probably lower,” he added. The president also predicted the impact on the stock market would reverse once the conflict ends.
Markets have been growing weary of Trump as he has continued to give an extremely mixed picture of where the US stands in negotiations with Iran.
Stocks dipped on Thursday morning after Trump posted a warning to Iranian negotiators that they “better get serious, before it’s too late”.
“Once that happens, there is NO TURNING BACK, and it won’t be pretty!” Trump wrote.
But later in the morning, Trump said that there were “very substantial talks” happening with Iran and that the country allowed 10 oil tankers to pass the blocked strait of Hormuz. Trump said the passage was a “present” from Iran to the US amid the conflict.
Right after markets closed, the White House announced it will extend a pause on Iranian energy infrastructure strikes by 10 days, until 6 April.
“Talks are ongoing and, despite erroneous statements to the contrary by the Fake News Media, and others, they are going very well,” Trump wrote on Thursday afternoon.
Trump’s comments came as a new report estimates US inflation will average 4.2% this year, compared with an average of about 2.6% in 2025, according to the Organization for Economic and Cooperation and Development (OECD). The increase in inflation reverses what was expected to be strong growth for the global economy before the conflict began.
Inflation is expected to be 1.2% higher on average across the G20 countries. Much of the squeeze stems from higher oil prices, which can trickle down the supply chain. The OECD’s report noted the impact on the price of fertilizer, which is imported heavily from the region, could particularly affect prices.
“The evolving conflict in the Middle East has human and economic costs for the countries directly involved, and will test the resilience of the global economy,” the report said.
