Oil rises, stocks fall as Trump cancels Iran peace trip to Pakistan

Investors flinched, but only briefly. Oil climbed and stocks slipped as Donald Trump pulled back from a Pakistan trip for U.S. negotiators, yet the market reaction never looked like panic. The muted move suggested traders still believed the Strait of Hormuz would stay open, that the Iran war would not spill into a broader energy shock, and that another round of Middle East brinkmanship might be more noise than rupture.

The sharpest moves came as a fragile two-week ceasefire in the Iran war neared its expiration on Wednesday, April 23. On Tuesday, April 21, the Dow Jones Industrial Average fell 293 points, or 0.6%, while the S&P 500 and Nasdaq each slipped 0.6%. Brent crude rose from below $95 a barrel to about $100 during the session before settling at $98.48, up 3.1%. The rush into oil reflected the risk surrounding the Strait of Hormuz, the narrow waterway that normally carries about one-fifth of the world’s oil and liquefied natural gas supplies.

Even with that pressure, the market’s response was measured compared with the earlier phase of the conflict, when Brent briefly surged above $119 and the S&P 500 fell nearly 10% below its prior all-time high. By Wednesday, April 22, Wall Street had already recovered, with the Dow up 341.27 points, the S&P 500 closing at a record 7,137.91 and the Nasdaq also finishing at a record high. Traders were effectively betting that the chokepoint would remain open and that the global economy would avoid major damage.

That calm did not survive another round of diplomatic whiplash. On Saturday, April 25, Trump canceled plans for special envoy Steve Witkoff and Jared Kushner to travel to Islamabad, saying on Truth Social that there was “tremendous confusion” inside Iran’s leadership and that the United States had “all the cards.” He later told Fox News and Axios that the cancellation did not necessarily mean the war was restarting. He also said Iran had sent a new proposal that was better than the previous one, though still not acceptable.

Before the cancellation, Abbas Araghchi had met in Pakistan with Prime Minister Shehbaz Sharif, Foreign Minister Ishaq Dar and Army chief Asim Munir. Araghchi left Pakistan, then returned to Islamabad on Sunday before heading to Russia for further talks. The sequence underscored how much the market was looking past the diplomatic theater and focusing instead on one question: whether the oil flow through Hormuz would actually be threatened. For now, investors appear to think the answer is still no.