Stocks fall and global oil reclaims $100 as Iran’s new supreme leader vows to keep Strait of Hormuz closed
By John Towfighi, CNN
New York (CNN) — Stocks fell and global oil prices settled at $100 per barrel for the first time since 2022 as the effective closure of the Strait of Hormuz continued to roil markets.
The major US stock indexes each closed lower by more than 1.5%, extending a recent bout of volatility. The Dow fell 739 points, or 1.56%. The S&P 500 dropped 1.52%, and the tech-heavy Nasdaq Composite sank 1.78%, as the war with Iran stokes fears of higher energy costs and disruptions to the global economy.
US crude oil prices surged 9.72% to settle at $95.73 per barrel. Brent crude, the international oil benchmark, rose 9.22% to settle at $100.46 per barrel. It’s the first time Brent has settled above $100 per barrel since August 2022.
Oil prices climbed as an Iranian state television anchor read a statement attributed to Iran’s new supreme leader, Mojtaba Khamenei, warning that the crucial Strait of Hormuz will remain closed as a “tool of pressure.” The message also said that all US bases in the region “will be attacked” unless they shut down.
The Strait of Hormuz, the vital waterway off Iran’s coast through which 20% of global oil consumption flows, has been effectively closed since the war began. That has sent oil prices soaring and dimmed the outlook for stocks across the globe.
“The implicit closure of the Strait of Hormuz remains the hinge factor for global markets,” Felix Vezina-Poirier, chief strategist at BCA Research, said in a note.
Oil prices have been on a rollercoaster this week. Brent surged to nearly $120 early Monday, settled at $87.80 Tuesday and then surged Wednesday and Thursday to reclaim $100 per barrel.
Nerves about the Strait of Hormuz sent oil prices higher Thursday, despite the International Energy Agency on Wednesday agreeing to release 400 million barrels of oil into the global market to try and ease price concerns.
The Strait of Hormuz has become a flashpoint in the war, with US officials demanding it reopens and the Iranian regime doubling down on preventing business as usual.
US Energy Secretary Chris Wright said Thursday that the strait must ultimately reopen as the United States continues military operations in Iran.
“Now the Strait of Hormuz needs to be and will be reopened,” Wright said on “CNN News Central.”
Meanwhile, the IEA said in its monthly oil report Thursday that the Middle East conflict is “creating the largest supply disruption in the history of the global oil market.”
US Treasury yields moved higher as investors recalibrated expectations for potentially higher inflation caused by higher energy prices. The 10-year yield rose to 4.26%, its highest level since early February.
The rise in Treasury yields impacted mortgage rates: The average rate of a standard, 30-year fixed mortgage was 6.11% in the week ending March 12, according to a survey of lenders by Freddie Mac released Thursday. That was biggest weekly increase since April, when President Donald Trump’s “Liberation Day” tariffs caused bond yields to spike.
The US dollar strengthened against other major currencies, benefitting from safe haven demand. The US dollar index was up 0.5% and hit its highest level this year.
Wall Street’s fear gauge, the VIX, jumped 10%, reflecting the heightened volatility in markets. CNN’s Fear and Greed Index slipped into “extreme fear.” Brent crude prices are up nearly 38% since the war began. US crude prices are up nearly 43%.
“For now, oil remains the primary market driver, with developments around the reopening of the Strait of Hormuz acting as either an accelerator or a brake on risk appetite,” Adam Turnquist, chief technical strategist at LPL Financial, said in a note.
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CNN’s Bryan Mena, Ivana Kottasová and Alejandra Jaramillo contributed reporting.
