Stocks on Wall Street took a hit on Thursday as oil prices surged to their highest level since the summer of 2024 due to the U.S.-Israeli conflict with Iran. The S&P 500 declined by 0.6%, wiping out earlier gains for the year. The Dow Jones Industrial Average saw a brief drop of over 1,100 points before closing with a 1.6% loss. Additionally, the Nasdaq composite slipped by 0.3%.
Global financial markets are closely monitoring oil price movements, with concerns rising over the potential long-term impact on the global economy, consumer spending, and interest rates. Benchmark U.S. crude jumped 8.5% to $81.01 per barrel, while Brent crude, the international standard, rose 4.9% to $85.41 per barrel.
Although oil prices slightly retreated later in the day, uncertainty persists regarding the duration of oil production disruptions caused by the escalating conflict with Iran. Gasoline prices in the U.S. have already surged, with the average price per gallon reaching $3.25, a 9% increase from the previous week.
Analysts and investors fear that sustained spikes in oil prices, potentially reaching $100 per barrel, could severely strain the global economy. The Strait of Hormuz, through which a significant portion of the world’s oil passes, remains a critical point of focus amid the ongoing tensions.
The U.S. stock market has a history of resilience post-conflicts, provided oil prices remain relatively stable. Market experts recommend patience and caution amidst the current volatility. Despite the market turbulence, the S&P 500 is down only 0.7% for the week, with tech and oil stocks helping to offset broader losses.
Airlines stocks faced notable declines, impacted by rising fuel costs and disrupted travel due to the conflict. Major carriers like American Airlines, United Airlines, and Delta Air Lines saw significant drops in their stock prices. Smaller companies also experienced substantial losses, reflecting growing concerns about the economy and potential interest rate hikes.
While Asian markets rebounded from significant losses, European indexes fell as oil prices continued to rise. South Korea’s Kospi surged 9.6% after a previous sharp decline, while France’s CAC 40 and Germany’s DAX dropped by 1.5% and 1.6%, respectively.