Oil prices jumped as much as 5% Thursday morning, sending stocks nosediving and pushing Treasury yields higher as fresh Iranian attacks in the Strait of Hormuz disrupted tanker traffic.
By approximately 9:40 a.m. ET, Brent crude oil futures rose 4.3% to $104.54 a barrel – on track for its highest closing price in weeks – and West Texas Intermediate crude increased 4.3% to $92.09 after data revealed daily traffic had trickled to a mere fraction of pre-war levels.
Reports that President Trump could soon order US forces to resume a large-scale operation in Iran multiplied traders’ fears, sending the US 10-year Treasury yield higher to 5.294% – reversing the previous day’s declines.
The 10-year yield has risen for 10 of the past 12 trading days, hovering near a 24-year high. A global bond sell-off has pushed yields around the world higher, as investors fear persistent inflation and more interest-rate hikes.
The Dow Jones Industrial Average also fell 95 points, or 0.2%, while the S&P 500 and Nasdaq tumbled 0.4% and 0.6%, respectively.
National average gasoline prices have remained stubbornly above $4 a gallon amid the war with Iran. Diesel, which is used for home heating oil and transportation, meaning it can impact food and apparel prices, has soared higher than $6 a gallon.
The US had partially restored traffic through the Persian Gulf, with sailors reportedly being offered as much as $25,000 a trip to make the dangerous voyage – but Tehran responded by ramping up its attacks on commercial vessels.
Producers off the US Gulf Coast were also forced to slash production due to an intensifying hurricane, further restricting supply – and threatening to keep prices elevated.
The Atlantic reported Wednesday that Trump is weighing whether to resume strikes on Iran ahead of the midterms, which are less than a month away. He had previously said the US would likely resume strikes immediately after the consequential elections.
If Trump does move forward, the escalation would break a three-month tremulous stalemate between Washington and Tehran – and likely reheat inflation fears, as Americans headed to the polls are already concerned about affordability.
The White House did not immediately respond to The Post’s request for comment on whether the president has made a decision on the resumption of strikes.
On Tuesday, just seven commodity vessels passed through the strait, marking the lowest total since July 23 as attacks on tankers reached their highest level since the start of the war, according to data analytics firm Kpler.
“Crude crossing the strait fell 27% from a wartime high the week before, to at least 10.1 million barrels a day,” Kpler analysts Emmanuel Belostrino and Yui Torikata wrote in a note Tuesday.
“That is back to its September average, but 74% of its pre-war level.”
The previous week, from Sept. 28 through Oct. 4, daily traffic in the strait averaged fewer than 23 ships a day, according to data from MarineTraffic.
That’s a far drop from the hundreds of vessels that transited the waterway each day before the war.