Trump warns of bombing Iranian infrastructure if attacks occur in Hormuz Strait

President Trump has declared that the United States will respond to any Iranian attacks on ships in the Strait of Hormuz by bombing Iranian infrastructure, including bridges and power plants. This policy, announced by Trump, applies “from this point forward” and could target facilities near or inside Tehran. The announcement comes amid ongoing tensions in the 2026 Iran war, characterized by a series of exchanges between the U.S. and Iran over control of the critical shipping lane. Markets appear to interpret this shift towards targeting civilian infrastructure as an escalation, potentially complicating the prospects for a U.S.-Iran deal in 2026. Key Takeaways Trump’s announcement appears to increase tensions, suggesting a decrease in the likelihood of a U.S.-Iran deal that includes reconstruction funding. The market for Iran Reconstruction Funding in a U.S.-Iran deal for 2026 has seen a decrease in the probability of a YES outcome, now priced at 28.5%. The focus on civilian infrastructure indicates a significant escalation from previous military-targeted exchanges, affecting market expectations. What to Watch The reaction of Iranian officials and international mediators could influ...