Markets on Wall Street retreated and oil prices jumped another 5% again early Thursday as the war in Iran approached its second week with no indication that the United States and Israel were ready to scale back their attacks.
Futures for the S&P 500 lost 0.5% before the opening bell, while futures for the Dow Jones Industrial Average were 0.6% lower. Nasdaq futures were also down 0.5%. On Wednesday, the Dow declined 0.6% to its lowest level the year.
Oil prices initially shot more than 9% higher as supply concerns worsened with Iranian attacks on commercial shipping around the Strait of Hormuz. The U.S. campaign of airstrikes in Iran is now in its 13th day.
U.S. benchmark crude oil jumped $4.52 to $91.77 a barrel. Brent, the international standard, climbed $5.34 to $97.32 per barrel after briefly eclipsing the $100 level.
Iran has escalated its attacks aimed at generating enough global economic pain to pressure the United States and Israel to end the war, targeting oil fields and refineries in a handful of Gulf Arab nations. Iran's actions have effectively stopped cargo traffic through the narrow Strait of Hormuz, through which a fifth of all traded oil passes.
In response, the International Energy Agency agreed Wednesday to release 400 million barrels of oil, the largest volume of emergency oil reserves in its history, in a bid to counter the war’s effects on energy markets. The U.S. planned to release 172 million barrels of oil next week from its Strategic Petroleum Reserve to combat steep prices.
The IEA’s announcement came a day after energy ministers from the Group of Seven — the leading industrialized nations of Canada, the United States, France, Italy, Japan, Germany and Britain — met in Paris to look at ways to bring down prices.
But the continued strife and uncertainty have fueled speculation prices could push still higher, and that pulled markets around the globe lower.
In a report, Oxford Economics said “the swings in Brent crude oil prices over the past several days are eye-catching and odds are volatility will remain because of the absence of a timeline for when the conflict will de-escalate and when the Strait of Hormuz, which is effectively closed, will see traffic begin to recover.”
The level of volatility suggests that depending on news developments, oil prices could spike as high as $140 per barrel, Oxford analysts said.
Since the start of the war, sharp moves for oil prices have triggered swings up and down for financial markets worldwide, sometimes by the hour. Oil prices briefly spiked to their highest levels since 2022 this week because of the possibility that production in the Middle East could be blocked for a long time, which in turn raised worries about a surge of debilitating inflation for the global economy.
In Europe at midday, Germany's DAX and Britain's FTSE 100 were both relatively unchanged, while the CAC 40 in Paris lost 0.4%.
During Asian trading, Tokyo's Nikkei 225 fell 1% to 54,452.96. In South Korea, the Kospi lost 0.5% to 5,583.25, while Hong Kong's Hang Seng gave up 0.7% to 25,716.76.
The Shanghai Composite index shed 0.1% to 4,129.10 and in Australia, the S&P/ASX 200 dropped 1.3% to 8,629.00.
In currency trading early Thursday, the dollar fell to 158.62 Japanese yen from 158.95 yen. The euro inched down to $1.1563 from $1.1566.
