Stock futures tumble as war drives oil above $100 for the first time since 2022
The Mideast war is causing escalating damage to oil supplies.
Oil futures broke above $100 per barrel on Sunday evening for the first time since 2022 as the escalating conflict in the Middle East exacerbates disruptions to this all-important commodity.
Front-month Brent and West Texas Intermediate futures peaked near $120 on Sunday evening, before paring much of that advance amid a report from the Financial Times that the G7 finance ministers would hold a call with the International Energy Agency to discuss a coordinated release of 300 million to 400 million barrels held in reserve to alleviate some of the supply crunch.
S&P 500 futures and Nasdaq 100 futures were down more than 2% on Sunday evening, but the SPDR S&P 500 ETF and Invesco QQQ Trust managed to reverse more than half of that decline by 8:30 a.m. ET on Monday.
Spiking oil prices threaten to weigh on consumer and business spending as well as undermine confidence, which could precipitate an economic downturn.
Tanker traffic through the Strait of Hormuz has become virtually nonexistent in the wake of the US-Israeli attacks against Iran, with the Gulf nation leveraging its ability to create havoc in the choke point. That’s prompted oil-producing countries in the region, including Kuwait, the UAE, and Iraq, to curtail production because an inability to ship oil means there will soon be a lack of space to store it, as well. And both sides have struck energy infrastructure in the region, further contributing to supply stresses.
“For now, consuming markets have not fully felt the shortage because pre‑escalation cargoes are still arriving: roughly 10 days to India, 21 to China, and 10 to Northwest Europe — temporarily masking disruptions as the buffer shrinks,” wrote Natasha Kaneva, head of global commodities research at JPMorgan. “Within a week, as pre‑conflict cargoes are absorbed and new loadings stall, visible shortages could begin to emerge.”
