Iran war fears hit markets: Oil surges, stocks plunge
Stock futures plunged and energy prices climbed Tuesday as fears spread through global markets that the war in Iran could lead to prolonged disruption.
The reaction came as President Donald Trump indicated the U.S.-Israeli operation could last weeks. Iran’s retaliatory attacks across the Middle East have hit U.S. embassies and oil facilities in the Gulf and virtually paralyzed shipping through the Strait of Hormuz, a key waterway for global fuel supplies.
The conflict has also caused huge disruption to travel, with tens of thousands of people and air cargo stranded in popular destinations like Dubai, which were targeted by Tehran’s strikes.
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Futures contracts indicating where the S&P 500 will trade at the open fell 2%, while Dow futures forecast a decline of up to 970 points. Nasdaq 100 futures, which track the more tech-focused index, slipped 2.3%.
Meanwhile, energy prices continued to soar after recording a significant jump on Monday.
U.S. crude oil rose 7.5%, bringing its total rise since Sunday evening to more than 13% and pushing prices to their highest level since January 2025.
The international crude oil benchmark jumped 8% to its highest level since July 2024.
Soaring crude oil prices have also pushed up retail gasoline prices. As of Tuesday morning, the average U.S. gas price jumped 14 cents since last week to $3.077 per gallon.
By the end of the week, GasBuddy analyst Patrick De Haan predicted that “we’ll probably be closer to $3.10 to $3.20/gal.”
Natural gas prices also continued to rise, jumping more than 4% on Tuesday morning. Natural gas futures traded in Europe rose 40%, after QatarEnergy said it would stop production of liquefied natural gas on Monday and suspended production of a number of other energy products on Tuesday.
Markets also reacted negatively around the world.
In Italy, the benchmark FTSE MIB index plunged 4%. Germany’s DAX stock index fell 3.6%, while shares traded on France’s and the UK’s flagship indices fell around 2.7%.
The Stoxx 600, Europe’s answer to the S&P 500, slipped almost 3%. In Asia, Korea’s Kospi index fell 7% and Japan’s Nikkei 225 index fell 3%. Stocks in China, Hong Kong and India also fell more than 1%.
“The negative risk tone arguably reflects sentiment that missile and drone attacks are intensifying and spreading across the Middle East as Iran struck the US embassy in Riyadh and Israel targeted Hezbollah in Lebanon,” Lloyd’s Bank analysts said on Tuesday.
“Trump’s vacillations over the potential length of the war and lingering questions about the precise objective also do not help ease market uncertainty,” they added.
US markets ended Monday on a relatively subdued note. However, the additional strikes overnight and new comments from Trump appeared to alarm traders, who shifted away from more volatile assets like stocks and into bonds.
“The focus will now be on whether Iran can step up its attacks on the production facilities of the region’s major marginal energy suppliers,” ING analysts wrote in a research note on Tuesday.
