Crude climbs 7% amid Israel-Iran escalation; US markets take a hit

New York: Oil prices surged sharply on Friday after Israel launched strikes on Iranian nuclear and military sites, fuelling fears of broader conflict in the Middle East. The possibility of disruptions in crude supplies sent shockwaves through financial markets worldwide.

The benchmark U.S. crude rose by 7.3% to $72.98 per barrel, while Brent crude gained 7% to reach $74.23. The surge in prices followed concerns that violence in the oil-rich region, particularly any wider war, could reduce Iran’s exports and restrict traffic through the Strait of Hormuz—a key chokepoint for global oil transport.

Wall Street slumps on shock and uncertainty

The S&P 500 shed 1.1%, wiping out modest weekly gains. The Dow Jones Industrial Average plummeted 769 points (1.8%), while the Nasdaq composite fell 1.3%. Markets reached their lowest levels of the day after reports of Iran launching ballistic missiles towards Israel.

The falls reflect anxiety among investors. “This is an economic shock that nobody really needs, but it is one that seems more like a shock to sentiment than to the fundamentals of the economy,” said Brian Jacobsen, chief economist at Annex Wealth Management.

Oil producers and defence stocks rally

Despite broad declines, U.S. oil producers and defence contractors posted gains. Exxon Mobil rose 2.2% and ConocoPhillips climbed 2.4%, benefiting from the rising oil prices. Defence firms also rallied, with Lockheed Martin, Northrop Grumman, and RTX each gaining over 3%.

However, firms heavily dependent on fuel and consumer confidence suffered major setbacks. Carnival dropped 4.9%, United Airlines declined 4.4%, and Norwegian Cruise Line Holdings fell 5%.

Gold shines as investors seek safe assets

Gold prices rose by 1.4% as investors turned to safer assets. U.S. Treasury bonds, however, saw prices fall—unusual during geopolitical crises—due to concerns that higher oil prices might stoke inflation.

The 10-year Treasury yield climbed from 4.36% to 4.41%, raising borrowing costs for households and businesses. The inflationary threat added to pressure on stocks and bonds alike.

Consumer sentiment lifts, inflation outlook eases

A University of Michigan survey indicated a rebound in U.S. consumer sentiment after months of decline. The improvement was partly attributed to President Donald Trump’s decision to pause several tariffs. The survey also showed a moderation in inflation expectations.

Tech sector hit despite strong results

Adobe shares fell 5.3%, even though the company reported better-than-expected quarterly profits. Analysts said investors may have been disappointed by the revenue forecasts for the year ahead.

Global indices follow suit

European and Asian markets echoed the downturn. France’s CAC 40 slipped 1%, and Germany’s DAX dropped 1.1%, reflecting global unease over geopolitical risks.