Oil prices spiked and stocks sank on Thursday after Donald Trump reiterated that US forces would hammer Iran for another two to three weeks but offered no solution to the closure of the Strait of Hormuz that has crippled global markets.
Investors appeared to be unimpressed with the US president's much-anticipated address to the nation, in which he again called on countries that rely on the waterway for their energy supplies to reopen it themselves, AFP said.
The comments came amid growing fears about the economic impact of the crisis, which has seen governments introduce support measures, with the World Bank saying it was "extremely concerned".
In a speech lasting less than 20 minutes, Trump added little to what he has said in the past, warning that "over the next two to three weeks, we are going to bring them back to the Stone Ages, where they belong".
He also told the nation that US forces would meet all their battlefield goals "very, very shortly".
The address dented a nascent recovery in world markets that had come after Trump said earlier this week that the war would be ending "very soon", while his Iranian counterpart said his country had the "necessary will" to end it.
Brent crude, which had fallen back below $100 a barrel Wednesday, surged as much as five percent to hit $106.29, while West Texas Intermediate jumped more than four percent to as high as $104.29.
Trump "spoke of objectives met, but not of resolution. Of continued strikes, not withdrawal. Of optional escalation, not closure", wrote Stephen Innes at SPI Asset Management.
"The message was not one of panic, but it was unmistakably one of unfinished business. And in markets, unfinished business is oxygen for volatility.
"So oil did what oil always does when the illusion cracks. It surged, not because the war suddenly worsened, but because the market had prematurely priced in the expectation that it would end."
The reaction among equity traders was no better, with Seoul -- which soared more than eight percent Wednesday -- losing three percent. Tokyo, Hong Kong, Shanghai, Singapore, Taipei and Sydney were also well down.
The speech "did not contain what the market had hoped for -- namely, indications of an end to the fighting", Jumpei Tanaka, of Pictet Asset Management, said. "Instead, he suggested a potential escalation of the situation, which is a clear negative for stocks."
Markets have endured huge volatility since the US-Israeli war on Iran was launched on February 28, with the president frequently U-turning after making policy statements, particularly with regards to foreign relations and military operations.
His announcements that Washington and Tehran were in peace talks have often been denied by the Iranian republic, while its Revolutionary Guards insisted the strait will remain closed to the country's "enemies".
Trump's repeated demand that countries that rely on energy through the Strait of Hormuz "get your own oil" comes as Britain prepares to host a meeting of about 35 nations Thursday to discuss how to reopen the waterway.
The meeting will "assess all viable diplomatic and political measures that we can take to restore freedom of navigation, guarantee the safety of trapped ships and seafarers and resume the movement of vital commodities", UK Prime Minister Keir Starmer said.
Meanwhile, the World Bank Managing Director Paschal Donohoe said he was fearful about the global economic impact of the crisis.
"We are extremely concerned regarding the effect that this will have on inflation, on jobs and on food security," he told AFP as the Bank announced a new partnership with the International Monetary Fund and International Energy Agency to coordinate aid responses.
