Oil prices retreat sharply while global markets remain volatile amid uncertainty over the duration of the Middle East conflict.
By yourNEWS Media Newsroom
U.S. stocks slipped slightly Tuesday as investors weighed new developments in the ongoing conflict involving Iran and awaited clearer signals about how long the war might last.
The S&P 500 declined 0.2 percent after giving up earlier gains, while the Dow Jones Industrial Average fell 0.1 percent. The Nasdaq composite ended the day essentially unchanged as traders monitored sharp swings in oil prices tied to the conflict in the Middle East.
Energy markets remained the primary driver of volatility across global financial markets. Oil prices retreated significantly from levels reached earlier in the week after surging amid fears that the war could disrupt global energy supplies.
Brent crude, the international benchmark, settled at $87.80 per barrel, marking a drop of 11.3 percent from its previous settlement. U.S. benchmark crude also declined sharply, finishing at $83.45 per barrel, down 11.9 percent compared with late Monday trading levels.
The sharp drop followed a dramatic spike earlier in the week when oil prices briefly approached $120 per barrel, their highest level since 2022. The rally had been fueled by concerns that fighting near the Persian Gulf could block key shipping routes and restrict the global supply of oil and natural gas.
Prices fell Monday afternoon after President Donald Trump suggested the conflict could soon wind down.
“I think the war is very complete, pretty much,” Trump said in comments to CBS News, raising hopes among investors that oil shipments from the Middle East could resume without prolonged disruption.
However, uncertainty returned after additional remarks from Iranian officials indicated the conflict may continue. A spokesperson for Iran’s paramilitary Revolutionary Guard said the country would determine when the war ends.
Iran also launched new missile and drone attacks Tuesday targeting Israel and several Gulf Arab states, keeping tensions elevated across the region and maintaining pressure on global energy markets.
One of the central concerns for markets remains the status of the Strait of Hormuz, the narrow waterway off Iran’s southern coast through which roughly one-fifth of the world’s oil supply typically passes.
Trump reiterated Monday that the United States would not allow Iran to block the passage.
“If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far,” Trump wrote in a message posted to social media.
Energy analysts say the outcome of the conflict could determine whether oil prices stabilize or surge further.
“The outlook for oil right now is about as binary as it gets,” said Hakan Kaya, senior portfolio manager at Neuberger Berman. “Either the Strait of Hormuz reopens and you see a massive unwind of the risk premium, or it stays shut and we are looking at the largest supply disruption in modern history.”
Global markets have been reacting quickly to each new development. Stock markets across Asia and Europe rallied earlier Tuesday in their first opportunity to trade after the sharp drop in oil prices.
South Korea’s market surged 5.3 percent, Hong Kong’s index climbed 2.2 percent, and France’s benchmark rose 1.8 percent.
Japan’s Nikkei 225 advanced 2.9 percent after the government released revised economic data showing stronger-than-expected growth during the final quarter of last year.
Meanwhile, the International Energy Agency scheduled a meeting Tuesday to discuss whether its 32 member countries should release emergency oil reserves in an effort to stabilize energy prices.
Economists note that financial markets have historically rebounded quickly after military conflicts as long as oil prices do not remain elevated for extended periods.
Sustained increases in energy costs could pressure household budgets already strained by inflation and raise costs for businesses dependent on fuel for transportation, manufacturing, and logistics.
Such a scenario could create the risk of “stagflation,” a condition where economic growth slows while inflation remains high.
Despite the broader market uncertainty, some companies saw gains. Vertex Pharmaceuticals rose 8 percent after reporting encouraging results from a clinical trial involving a treatment for a severe form of kidney disease.
In the bond market, the yield on the 10-year U.S. Treasury note edged up to 4.14 percent from 4.12 percent the previous day, reflecting continued caution among investors as they assess the economic impact of the evolving geopolitical situation.
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