Oil Climbs and Stocks Retreat as Renewed U.S.-Iran Tensions Rattle Markets

By Anietie anii-bassey

Oil prices rose sharply Monday while U.S. stocks pulled back from record highs as investors reacted to a renewed escalation in tensions between the United States and Iran.

The decline on Wall Street was relatively modest compared with earlier swings during the conflict, suggesting that investors still believe a diplomatic agreement remains possible despite the latest confrontation.

The benchmark S&P 500 fell 0.4% from its record high and was on course for only its second decline in the past 14 trading sessions. The Dow Jones Industrial Average dropped 115 points, or 0.2%, while the Nasdaq Composite lost 0.7%.

Markets turned lower after the United States seized an Iranian-flagged cargo ship that officials said had attempted to evade the U.S. naval blockade of Iranian ports. The move renewed fears that the standoff between Washington and Tehran could further disrupt global oil supplies.

The price of Brent crude, the international benchmark for oil, climbed 5.1% to $94.98 a barrel. Traders were increasingly concerned that Iran could restrict petroleum exports moving through the strategically vital Strait of Hormuz if the conflict continues.

The latest rise in oil prices marked a reversal from Friday’s trading session, when stocks rallied and crude prices dropped after Iran signaled it would reopen the strait to commercial shipping. That optimism faded quickly after Tehran shut the waterway again on Saturday following the U.S. decision to continue enforcing its blockade of Iranian ports.

Investors are now focused on a major deadline looming Tuesday night, when a ceasefire agreement between the United States and Iran is due to expire at 8 p.m. Eastern time, which will be early Wednesday morning in Tehran.

Even with Monday’s gains, oil prices remain below the highest levels reached during the conflict. Brent crude briefly traded above $119 per barrel earlier in the war when fears of a major supply shock were at their peak.

Likewise, U.S. stocks remain above the levels they held before the conflict began, reflecting continued confidence that the war may eventually be resolved without lasting damage to the global economy.

The relatively restrained moves in financial markets suggest many investors still expect the United States and Iran to reach some kind of agreement that would allow Middle Eastern oil supplies to flow more normally again. Such a resolution would likely be in the economic interests of both countries.

Companies most exposed to rising fuel costs were among the day’s biggest losers.

Norwegian Cruise Line Holdings dropped 5.1%, while Carnival Corporation fell 1.4%.

Airline shares also moved lower as higher oil prices threatened to increase operating costs. United Airlines slipped 2.4%, while American Airlines fell 5%.

American Airlines came under additional pressure after it said it had no interest in merging with United Airlines. Speculation about a possible merger between the two carriers had pushed airline stocks higher last week after reports suggested United was interested in a deal.

One of the strongest performers on Wall Street was TopBuild, which surged 16.4% after agreeing to be acquired by QXO in a transaction valued at about $17 billion.

QXO said the acquisition would make it the second-largest publicly traded building products distributor in North America. Shares of QXO, however, fell 8.2% following the announcement.

Despite Monday’s pullback, one of the main drivers behind the U.S. stock market’s strength in recent weeks has been strong corporate earnings for the opening months of 2026.

Several of the nation’s largest banks, including JPMorgan Chase and Bank of America, have reported stronger-than-expected profits and said they continue to see signs of resilience in the U.S. economy, especially because of steady consumer spending.

Strategists at Morgan Stanley said the recovery in corporate earnings remains intact despite the geopolitical risks posed by the Middle East conflict. Analysts have continued raising profit forecasts for companies even after the war began.

About 10% of the companies in the S&P 500 have reported earnings for the first quarter of 2026 so far. According to FactSet, nearly 90% of those companies have exceeded analysts’ profit expectations.

If the rest of the companies in the index merely meet forecasts, overall earnings per share for S&P 500 companies would be about 13% higher than a year ago.

Investors are also preparing for a busy week of corporate earnings reports from major companies including UnitedHealth Group on Tuesday, Tesla on Wednesday and Procter & Gamble on Friday.

In overseas markets, European stocks moved lower while Asian markets ended the day mostly higher. Germany’s DAX fell 1.2%, while Hong Kong’s Hang Seng Index gained 0.8%.