Oil prices rise toward $100 as stocks slip on doubts about the US-Iran ceasefire

Oil prices pushed back toward $100 per barrel on Thursday as global stocks surrendered part of the prior day’s rally. The pullback followed renewed uncertainty around a two-week ceasefire involving the United States, Iran and Israel, whose announcement had fueled strong optimism across markets just a day earlier.

Energy markets swing as Strait of Hormuz risks re-emerge

Benchmark U.S. crude jumped 5.4% to $99.48 per barrel, while Brent, the international benchmark, climbed 3.5% to $98.06. Brent remains below the brief peak near $119 reached at the height of recent war concerns, yet well above the roughly $70 seen before the conflict.

The move followed reports from semi-official media in Iran suggesting forces had laid mines in the Strait of Hormuz, the narrow maritime chokepoint critical to global energy flows. Any disruption there can trap oil and natural gas in the Persian Gulf and keep supplies from reaching world markets, intensifying price pressures.

Strategists at Macquarie said the upward pressure on crude may linger given the apparent gap between U.S. and Iranian positions, even if traffic through the strait resumes. Persistent supply risk, they noted, could prompt buyers to hoard barrels, effectively tightening the market without direct damage to infrastructure.

Stocks ease after rally; early Wall Street moves

U.S. equities opened softer as the ceasefire euphoria faded. By 9:35 a.m. Eastern time, the S&P 500 was down 0.2%, the Dow Jones Industrial Average fell 166 points (0.3%), and the Nasdaq composite slipped 0.2%.

Mixed U.S. data keeps investors cautious

Thursday’s economic reports offered a conflicting picture. An underlying inflation measure closely watched by the Federal Reserve cooled in February before the latest geopolitical flare-up, but not as much as economists had expected. That stickiness raises concerns that energy-driven cost pressures could rekindle broader inflation.

Separately, new filings for unemployment benefits came in higher than anticipated. While claims remained low by historical standards, the uptick may hint at a pickup in layoffs as growth moderates.

In bonds, Treasury yields seesawed after the data before settling near prior levels. The 10-year Treasury yield held at 4.29%, up from around 3.97% before the conflict, a rise that has already filtered into higher rates for mortgages and other consumer and business loans.

What it means for the Fed

If oil prices remain elevated, the resulting inflation impulse could complicate the Fed’s path to cutting interest rates to support a slowing economy, even if labor conditions soften further. Minutes from the central bank’s latest meeting suggested some policymakers are entertaining the possibility of additional tightening should price pressures prove persistent.

Global markets follow Wall Street lower

Overseas, the cautious mood was evident. South Korea’s Kospi dropped 1.6%, while Germany’s DAX fell 1.4%, among the larger declines across major markets.

Key takeaways

• U.S. crude neared $100 as supply risks around the Strait of Hormuz resurfaced; Brent approached $98.
• Stocks gave back part of Wednesday’s gains amid doubts about a two-week ceasefire framework.
• U.S. inflation came in slightly hotter than forecast, and jobless claims rose more than expected.
• The 10-year Treasury yield hovered at 4.29%, up notably from pre-war levels.
• Persistent energy inflation could delay or even reverse expected Fed rate cuts.

Together, these dynamics underscore a market highly sensitive to geopolitical headlines and inflation surprises. Until there is greater clarity on energy supply routes and the ceasefire’s durability, volatility across oil, bonds and equities is likely to remain elevated.