European equities opened the trading day under pressure on Thursday after an escalation in rhetoric from the White House removed optimism about a near-term halt to the five-week conflict involving Iran. At 03:10 ET (07:10 GMT), the pan-European Stoxx 600 was down 1.2%. Major national indices followed suit, with Germany's DAX falling 1.5%, France's CAC 40 sliding 1.2% and the U.K.'s FTSE 100 dropping 0.7%. The move reversed a two-day rally that had added more than 2.5% to the regional benchmark amid hopes the war was nearing its end.
In a prime-time address from the White House on Wednesday evening, President Trump did not put a timetable on the conflict and instead underscored a readiness to escalate. He said: "Were going to hit them extremely hard over the next two to three weeks." He added: "Were going to bring them back to the Stone Ages where they belong."
Trump also repeated a warning about targeting Iran's electricity network should Tehran decline a negotiated settlement, stating: "If there is no deal, we are going to hit each and every one of their electric generating plants very hard, and probably simultaneously." The president further said the United States would not take the lead in reopening the Strait of Hormuz, urging oil-dependent countries to secure access themselves or to buy U.S. energy, adding they could "just take it."
Iran publicly denied that any direct talks with Washington had taken place, and rejected President Trump's prior assertion that Tehran had requested a ceasefire. The breakdown in diplomatic signals coincided with a renewed upward move in crude prices and a broad reassessment of near-term supply risk.
Brent crude futures climbed more than 6% to trade above $107 a barrel in early European dealings, erasing the previous session's drop and amplifying concern about a longer-lasting disruption to shipments passing through the Strait of Hormuz. That maritime chokepoint, which has been effectively blocked by Iran since the hostilities began in late February, handles roughly a fifth of the world's oil. Brent has moved from approximately $70 a barrel before the conflict to a peak near $120, with diplomatic and military developments continuing to provoke sharp swings.
Companies in the energy sector are already adjusting to the heightened risk environment. Shell is reported to be in advanced negotiations with Venezuela to expand gas development across multiple offshore fields, with the talks aiming for access to about 20 trillion cubic feet of reserves. The plan would include piping gas to Trinidad for liquefied natural gas processing and increasing output at Atlantic LNG, where Shell holds a significant stake. The discussions face obstacles including prospective stake transfers from Chevron and complications related to Russian-linked ownership in some of the fields under consideration.
Higher crude costs are spilling into aviation. Ryanair's chief executive, Michael O'Leary, warned that European jet fuel supplies could be disrupted from June if the Middle East conflict persists, heightening the risk of summer flight cancellations. Airlines across Europe are already absorbing elevated fuel expenses connected to the Strait of Hormuz disruptions and are engaging in contingency planning as the season approaches.
Lufthansa separately signalled early signs of supply tightness, particularly in Asia, where several airports have already started to limit additional flights. Despite these strains, Ryanair indicated it still anticipates modest fare increases and passenger growth, noting that no major pricing shock has yet materialised.
Precious metals gave back recent gains on Thursday. Spot gold retreated 3.5% to $4,643 per ounce after jumping 2% in the prior session when ceasefire hopes had supported safe-haven demand. The metal's decline adds to a steep fall from its January record high of $5,602 per ounce. The pullback in gold was attributed in part to surging oil pushing inflation expectations higher, which in turn kept bond yields elevated and strengthened the dollar - all factors that typically weigh on a non-yielding asset like gold. Silver slid 6.9% to $70.77 per ounce.
Market participants and corporate managers are confronting a complex mix of geopolitical risk and its knock-on effects for commodity markets and travel flows. The immediate market reaction reflected the abrupt reversal of ceasefire expectations and a re-pricing of the probability of sustained supply disruption via the Strait of Hormuz. Which sectors bear the brunt is clear from early moves: energy producers and processors are directly implicated by potential supply shifts, while airlines are exposed through higher fuel costs and possible constraints on route capacity. Investors will be watching for any changes in military posture, diplomatic engagement, or logistics developments that could alter the supply picture.
At the open, the combination of downward pressure on equity indices, a sharp rebound in oil, and a decline in safe-haven metals captured the market's reassessment of risk after a brief period of optimism about the conflict's trajectory. Further moves in commodity prices, corporate operational statements, and official diplomatic signals are likely to determine near-term market direction.