Stocks fall while oil prices rise after Iran warns it may respond to ground offensive

Market Turmoil as Oil Prices Surge Amid Middle East Conflict

S&P 500 signage at the New York Stock Exchange in New York City, Thursday. Photo by Michael Nagle / Bloomberg via Getty Images

U.S. equities declined on Thursday, while oil prices continued their upward trajectory as tensions in the Middle East persisted.

Following a relatively steady session on Wednesday, U.S. crude oil prices jumped over 8% on Thursday, reaching nearly $81 per barrel. Since Sunday, crude prices have climbed 20%, marking the highest level seen since July 2024.

The global oil benchmark also experienced a significant increase, rising close to 4%.

Stock markets extended their earlier losses from the week. By early afternoon, the S&P 500 had dropped 1.2%, the Nasdaq composite was down 1%, and the Dow Jones Industrial Average had fallen by around 1,000 points, or roughly 2%.

Energy companies were the only sector in the S&P 500 showing gains, while industrials, materials, and consumer staples suffered the most significant declines.

Gasoline prices at the pump are also on the rise. According to GasBuddy, the national average price per gallon has increased to $3.25, up more than 30 cents since Sunday.

The spike in energy costs has fueled concerns about renewed inflation, pushing Treasury yields higher. By midday, the yield on the 10-year U.S. Treasury note surpassed 4.1%, and the 30-year yield exceeded 4.75%. As a result, the average 30-year mortgage rate reached 6.13% earlier in the day, reflecting the broad economic impact of the ongoing Iran conflict.

Less than a week into the conflict, there are few indications that the U.S.-led war against Iran is abating. On Thursday, Iranian Foreign Minister Abbas Araghchi told NBC News that Iran is prepared to defend itself if the U.S. attempts an invasion.

Efforts to Limit Economic Damage

Some measures are being taken to reduce the economic fallout from the U.S. military action against Iran.

On Tuesday, President Donald Trump announced that the U.S. International Development Finance Corporation would provide “political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf.”

Insurance companies report ongoing discussions with the administration to resume shipping activity near Iran’s coast, but many vessels remain stranded.

The Strait of Hormuz, located along Iran’s southern border, is a critical route for about 20% of the world’s daily oil shipments. Since the U.S. and Israel initiated strikes on Iran last Saturday, traffic through the strait has nearly halted, raising fears of a global oil supply crisis.

Araghchi stated that Iran currently has “no intention” of closing the strait but warned that “as the war continues... we will consider every scenario.” He also emphasized that international oil tankers are not being targeted.

Impact on Natural Gas Markets

Beyond oil, Qatar—the world’s second-largest exporter of liquefied natural gas—has suspended production due to the effective shutdown of the Strait of Hormuz and “military attacks on QatarEnergy’s operating facilities.”

As a result, U.S. natural gas prices have increased by about 4% since Sunday, while European prices have surged over 50%.

This article is adapted from an original report on NBCNews.com.