Hopes dim for swift end to Iran war after Trump speech, oil prices surge anew

Follow our live coverage here.

WASHINGTON/CAIRO - Hopes for a swift end to the Middle East war faded on April 2 after US President Donald Trump vowed more aggressive strikes on Iran, in an eagerly anticipated address that disappointed investors hoping for clearer signals of a way out.

Stocks slid and oil prices surged after Mr Trump said military operations would be intensified in the next two to three weeks, offering no concrete timeline for ending a conflict that sparked global energy supply chaos and has threatened to send the world economy into a tailspin.

"I can say tonight that we are on track to complete all of America's military objectives shortly, very shortly," Mr Trump said in an April 1 evening prime-time speech.

"We're going to hit them extremely hard over the next two to three weeks. We're going to bring them back to the Stone Ages where they belong."

Mr Trump also suggested the war could escalate if Iranian leaders did not give in to US terms during negotiations, with strikes on Iran's energy and oil infrastructure possible.

No reassurance on energy crisis

Benchmark Brent crude prices jumped about 5 per cent to US$106.16 per barrel, with little reassurance from Mr Trump's address about how the critical Strait of Hormuz energy conduit would reopen. Prices had fallen earlier on April 2 after settling lower in the previous session.

Stocks took a hit, with US index futures down 1 per cent and European futures sinking over 1.5 per cent. Almost all Asian bourses were in the red, with Japan's Nikkei down 1.8 per cent and MSCI's index of other Asia-Pacific shares down more than 1.5 per cent.

"If he (Trump) was trying to inspire confidence in the markets, he has not done that. The key question in all investors' minds is 'When is this going to be over?', that is what is creating the volatility," said Mr Russel Chesler, Head of Investments and Capital Markets at Vaneck Australia.

Shortly after Mr Trump's speech, the Israeli military said it had identified missiles launched from Iran toward Israeli territory.

Thousands of people have been killed across the Middle East since Feb 28, when the US and Israel struck Iran, triggering Iranian attacks on Israel, US bases and the Gulf states, while opening a new front in Lebanon.

Iran also all but closed the Strait of Hormuz, a vital waterway carrying about a fifth of global oil and liquefied natural gas, pushing up energy costs and weighing on Mr Trump's sagging approval ratings months ahead of pivotal midterm congressional elections.

But Mr Trump in his speech said the US did not need the strait and he challenged allies who rely on oil in the region to work towards reopening it.

"Many Americans have been concerned to see the recent rise in gasoline prices here at home," he said. "This short-term increase has been entirely the result of the Iranian regime launching deranged terror attacks against commercial oil tankers of neighbouring countries that have nothing to do with the conflict."

The International Monetary Fund, World Bank and International Energy Agency on April 1 warned the war was having "substantial, global and highly asymmetric" effects and said they would coordinate their response, including through potential financial support to those countries hit hardest.

Elusive prospects

In an interview earlier on April 1, Mr Trump said US-Israeli strikes had ensured Iran would not obtain nuclear weapons, adding that US forces could return with "spot hits" if the threat resurfaces.

"They were right at the doorstep (of a nuclear weapon)," he said in his TV address, without providing evidence, touting what he said were "swift, decisive, overwhelming victories on the battlefield".

"We are systematically dismantling the regime's ability to threaten America or project power outside of their borders."

Prior to Mr Trump's remarks, Iranian President Masoud Pezeshkian said in a letter addressed to the American people that his country harbours no enmity towards ordinary Americans.

Mr Trump said discussions were ongoing with Iranian leaders he considered less radical than previous leaders. On social media earlier on April 1, he said Iran had requested a ceasefire but that would not be considered until its Strait of Hormuz blockade ends. Iran denied making any such request.

A senior Iranian source told Reuters on April 1 that Tehran is demanding a guaranteed ceasefire to halt its attacks and said no talks have taken place through intermediaries on a temporary truce.

Taking the Strait

Two security sources from Pakistan, which is mediating in the conflict, told Reuters that Islamabad had proposed a temporary ceasefire but had not heard back from either side.

US Vice-President J.D. Vance communicated with intermediaries from Pakistan about the Iran conflict as recently as March 31, according to a source briefed on the matter, making clear Mr Trump was open to a ceasefire if certain demands were met.

Mr Trump had suggested on March 31 he could wind down the war soon without a deal, while scaling up threats to withdraw from NATO. He told Reuters he planned to express his disgust at NATO for what he considers its lack of support for US objectives in Iran.

He did not explicitly mention NATO in his address but urged countries in need of oil to buy it from the United States or to "build up some delayed courage".

"Go to the Strait and just take it," Mr Trump said. "Iran has been essentially decimated. The hard part is done, so it should be easy."

European states have sought to appear unruffled, and France's junior army minister Alice Rufo said operations by NATO in the Strait of Hormuz would be a breach of international law. REUTERS