Global financial markets have been whipsawed for four weeks since the onset of hostilities, as U.S. President Donald Trump simultaneously pursues diplomatic engagement and military pressure against Iran. Trump's major pronouncements have notably clustered around the New York market open and close, fueling suspicion that the timing is deliberate. When tensions between the U.S.-Israel bloc and Iran drive stocks down and oil prices up, Trump floats the prospect of negotiations. When ceasefire hopes rally markets in the opposite direction, he issues hawkish statements. With few other catalysts moving individual stocks, Trump's words have been triggering outsized price swings — and signs of front-running trades have emerged across markets.
On May 26 (local time), just after the market close, Trump posted on his social network Truth Social that he would extend the deadline for strikes on Iranian power plants by 10 days, to 8 p.m. on June 6. Whatever the outcome, the key takeaway is that the war will not end this month. Beyond that, Wall Street is expected to remain on edge given that Trump could reverse his position at any moment.
U.S. Military Prepares 'Final Blow'... Stocks Slide After Trump Mentions Seizing Iran's Oil Control
Russia's state-run RIA Novosti reported on May 26 that a U.S. military C-17A Globemaster III transport aircraft was spotted conducting maneuver drills in the United Arab Emirates that appeared to be preparation for a ground campaign in Iran. The activity is believed to be connected to a New York Times report on May 24 that roughly 2,000 troops from the U.S. Army's 82nd Airborne Division had been ordered to deploy to the Middle East. Separately, the U.S. is moving approximately 5,000 Marines from two Marine Expeditionary Units based in Okinawa, Japan, and California to the region.
Axios also reported on May 26 that the Pentagon is preparing four "final blow" options: ▲ an invasion or blockade of Kharg Island, home to Iran's largest oil export terminal; ▲ an invasion of Larak Island, critical to Iran's control of the Strait of Hormuz; ▲ seizure of Abu Musa Island and two nearby islets at the western entrance to the Strait of Hormuz; and ▲ interdiction and capture of vessels exporting Iranian crude from the eastern side of the strait. According to Axios, the military has also drawn up plans for a ground operation to penetrate deep into Iranian territory and secure highly enriched uranium (HEU) hidden inside nuclear facilities, as well as airstrikes on storage sites. Axios said Trump has not yet chosen among these scenarios. The message was that if talks with Iran fail to produce early results, the U.S. would escalate its offensive.
Trump had warned on Saturday, May 21, that he would strike Iran's power plants and energy infrastructure unless Tehran lifted its blockade of the Strait of Hormuz within 48 hours. Then on Monday, May 23, as the deadline neared, he suddenly posted on Truth Social — timed to the New York market open — that he had held "productive talks," and postponed the planned strikes by five days. The move completely upended the expectations of retail investors who had anticipated a market decline and an oil price spike. According to the Financial Times, trading in international crude oil futures surged 15 minutes before Trump's Truth Social post on May 23. Citing Bloomberg data, the FT estimated the notional value of those trades at approximately $580 million (about 870 billion won). The timing raised suspicions that someone had advance knowledge of Trump's announcement and placed bets accordingly.
On May 26, with the once-postponed strike deadline just one day away, Trump chaired a Cabinet meeting at the White House and warned: "Iran must make a deal, or it will face a continued American onslaught." The Dow Jones Industrial Average fell 1.01%, the S&P 500 dropped 1.74%, and the Nasdaq Composite slid 2.38%. Meanwhile, June-delivery West Texas Intermediate crude futures surged 4.61% and June-delivery Brent crude futures jumped 5.80%.
At the same meeting, Trump said, "The Iranians are terrible warriors but great negotiators, and they are dying to make a deal," adding that seizing control of Iran's oil is among the options on the table. He also directed sharp criticism at NATO allies that did not support the naval deployment in the Strait of Hormuz, saying, "I'm very disappointed and we will never forget." Steve Witkoff, the president's Middle East envoy, confirmed at the Cabinet meeting that the U.S. had delivered a 15-point peace proposal to Iran. Witkoff said Iran also wants a compromise but publicly warned Tehran: "Don't miscalculate."
Iran Responds to Negotiation Proposal While Massively Recruiting Ground Forces... Israel Eliminates Revolutionary Guard Commander, Goes Its Own Way
Iran appears to be employing its own two-track strategy. According to Iran's Tasnim News Agency on May 26, the Iranian government has delivered an official response to the U.S. 15-point peace proposal and is awaiting a reply. The report said Iran handed over its response on the night of May 25 and set out conditions including: ▲ immediate cessation of hostile aggression and acts of terrorism; ▲ creation of objective conditions to prevent a recurrence of war; ▲ guarantees of compensation for war damages; and ▲ implementation of a ceasefire across all fronts, including regional resistance forces. Iran notably reaffirmed that sovereignty over the Strait of Hormuz is its legitimate right.
At the same time, Iran escalated its rhetoric, characterizing the U.S. negotiation proposal as a "triple deception operation." Tehran alleged that Washington is using talks as a cover to pose as a champion of peace and deceive the world, while keeping international oil prices low and buying time to prepare a ground invasion of southern Iran.
Tasnim cited military sources on the same day as saying that "more than one million personnel have been organized for a ground war." The sources added that "in recent days, requests from young Iranians to join the Basij militia, the Islamic Revolutionary Guard Corps (IRGC), and the regular army have been pouring in." The source said, "As speculation grows that the U.S. may commit the foolish act of launching a ground war on Iran's southern front, there is overflowing determination among ground forces to turn our territory into a historic hell for Americans."
Yemen's Iran-aligned Houthi rebels also signaled they could mount a military response on Iran's behalf depending on the course of the war. According to AFP, Houthi leader Abdul Malik al-Houthi said in a May 26 speech: "As the people of Yemen, we repay loyalty with loyalty. If the situation calls for a military response, we will respond immediately." The Houthis attacked commercial vessels transiting the Bab el-Mandeb Strait — the gateway to the Suez Canal via the Red Sea — last year, ostensibly in support of Palestinian militant group Hamas during the Gaza war. If they support Iran in the same manner this time, both the Strait of Hormuz and the Bab el-Mandeb Strait could be simultaneously blocked.
Israel, too, is charting its own course. Israel announced on May 26 that it had killed Admiral Alireza Tangsiri, the IRGC's naval commander, along with senior naval officers. Admiral Tangsiri was known to have commanded bombing operations targeting vessels crossing the Strait of Hormuz. Israel also deployed its 162nd Division to southern Lebanon on the same day, citing the need to eliminate threats from Hezbollah, the Iran-aligned militant group. This brought the total Israeli force in Lebanon to five divisions.
