Former U.S. Ambassador to Israel Criticizes Trump’s Iran Strategy as Inconsistent, Raising Market Risks

Former U.S. Ambassador to Israel, a senior diplomatic figure with deep Middle East experience, has publicly questioned the coherence of Donald Trump’s strategy toward Iran, describing it as erratic and potentially destabilizing. The comments, made in a private briefing, highlight growing unease among foreign policy experts about the unpredictability of U.S. posture in a region already volatile due to ongoing conflicts in the Levant and the Red Sea. The concern is particularly acute given the current state of oil markets, where crude futures (CL=F) have seen a 6.2% spike over the past week, reaching $89.70 per barrel. This surge follows intelligence reports suggesting increased Iranian naval activity near Strait of Hormuz, a critical chokepoint for global oil shipments. With Iran's oil exports already constrained by sanctions, any disruption in the region could push global crude prices above $95 per barrel, according to market analysts. The defense sector has also reacted, with shares of Lockheed Martin (LMT) rising 4.3% in early trading as investors anticipate increased defense spending. The VIX index, a key measure of market volatility, climbed to 21.8, the highest level since November 2024, signaling a risk-off sentiment across equities. The combination of geopolitical uncertainty and rising energy prices is pressuring global inflation expectations and prompting central banks to reconsider rate cuts. Investors are now closely monitoring the rhetoric from Washington and Tehran, as well as shipping data and satellite imagery, for signals of escalation. Any miscalculation could trigger a sharp sell-off in equities and a flight to safe-haven assets like U.S. Treasuries.