The FTSE 100 index experienced volatility amidst rising tensions related to President Donald Trump’s latest ultimatum directed at Iran. The index showed signs of recovery after Trump delayed his directive regarding the critical Strait of Hormuz.
Trump’s Ultimatum and Market Response
On Saturday, March 21, 2026, Trump issued a 48-hour ultimatum demanding the Iranian government fully reopen the Strait of Hormuz. This strategic waterway facilitates nearly 20% of the world’s oil supply and had been closed due to ongoing conflicts.
According to reports, selected vessels from Iran’s allies had been permitted to transit the strait in recent days. However, the situation escalated when Trump threatened military action, stating he would “hit and obliterate” Iranian power plants if the strait remained closed by 23:44 GMT on March 23.
Iran’s Reaction
The Iranian Revolutionary Guards responded firmly. They declared the strait would be completely shut until their power infrastructure was restored in the event of a strike.
Market Recovery and Oil Prices
Following Trump’s announcement that “productive” discussions led to a delay in his ultimatum, the market reacted positively. The term ‘TACO,’ which stands for ‘Trump Always Chickens Out,’ was used by analysts to describe the situation, signaling a cautious optimism among investors.
- The price of oil dropped below $100 per barrel, down from $112.
- The FTSE 100 index showed significant gains during this period of uncertainty.
Government Response
In light of the unfolding situation, Sir Keir Starmer is convening an emergency meeting today. He will be joined by Chancellor Rachel Reeves and Bank of England Governor Andrew Bailey to address the economic implications of the conflict.
The Prime Minister emphasized that the meeting would explore all available options to respond to the crisis effectively. Updates on these discussions and their potential impact on markets will be monitored closely.
