If you're one of those investors who likes to check your portfolio on Saturday morning, this weekend just got a lot more stressful.
Donald Trump issued a 48-hour ultimatum to Iran late Friday, demanding the country "fully open, without threat" the Strait of Hormuz or face the destruction of its power plants, "starting with the biggest one first." The message, delivered via his signature all-caps social media style, gives Iran until Monday morning to comply - right as markets reopen.
Here's why this matters to your wallet: the Strait of Hormuz is a 25-mile-wide chokepoint between Iran and Oman through which roughly 20% of the world's oil supply flows. When Iran shut it down earlier this month, oil prices doubled practically overnight. Brent crude is currently sitting at around $112 per barrel - and that's with alternate routes running. If this escalates, analysts are talking $150 to $200.
The timing couldn't be worse for investors. Markets are closed all weekend, but geopolitical risk doesn't take time off. If Iran calls Trump's bluff or if the U.S. follows through on the threat, we could see serious volatility when trading resumes Monday morning. Energy stocks have been the obvious winners in this crisis, but airlines, retailers, and basically anything that depends on consumer spending could take a hit if oil keeps climbing.
For what it's worth, this isn't the first time Trump has used weekend deadlines to create pressure. The tactic forces adversaries to make decisions when markets can't immediately react, theoretically giving them less cover. Whether that works with Iran remains to be seen.
What should investors do? The boring answer is probably the right one: don't panic. If you've been following the Iran situation, this shouldn't be a complete surprise. Energy sector rotation has been happening for weeks. If you're nervous about Monday's open, the weekend is actually a good time to review your exposure - do you own a lot of airlines or consumer discretionary stocks that could get hammered? Are you underweight energy?
