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U.S. stock futures edged lower on Thursday, as a sharp spike in oil prices and escalating geopolitical tensions in the Middle East weighed on investor sentiment.
By 06:43 ET (10:43 GMT):
- Dow futures fell 67 points (0.2%)
- S&P 500 futures declined 0.2%
- Nasdaq 100 futures dropped 0.3%
Oil-driven inflation fears pressure equities
Markets remained under pressure after a fresh wave of attacks on key energy infrastructure, including the South Pars gas field—the Iranian section of the world’s largest natural gas reserve.
Iran retaliated with strikes on gas facilities in Qatar and Saudi Arabia, raising fears that the conflict could escalate into a broader regional crisis.
As a result, energy prices surged, intensifying concerns about a global inflation shock.
Oil prices jump sharply
Crude prices continued to rally:
- Brent crude surged 6.0% to $113.87 per barrel
- WTI crude rose 0.9% to $96.25 per barrel
The gap between Brent and WTI has widened to its largest in over a decade, partly due to the release of U.S. strategic oil reserves.
Meanwhile, European natural gas prices jumped 25% after strikes hit Ras Laffan in Qatar, one of the world’s largest LNG export facilities, responsible for up to 20% of global supply.
Strait of Hormuz disruption adds to risks
Markets are also grappling with the effective closure of the Strait of Hormuz, a critical shipping route for roughly 20% of global oil flows.
Shipping activity has been severely disrupted, as vessels avoid the region due to fears of further attacks, compounding supply concerns.
Wall Street declines sharply
The previous session saw significant losses across major U.S. indices:
- Dow Jones Industrial Average fell 1.6%
- S&P 500 dropped 1.4%
- Nasdaq Composite declined 1.5%
Investor sentiment was further dented by stronger-than-expected U.S. producer inflation data, which signaled that inflationary pressures were already building before the latest escalation in the Middle East.
Fed outlook offers limited relief
Despite rising inflation risks, the Federal Reserve kept interest rates unchanged and left the door open for potential rate cuts later in the year.
According to the Fed’s latest projections, 12 of 19 policymakers still expect at least one rate cut in 2026, unchanged from December forecasts.
However, the outlook remains uncertain, as policymakers weigh the trade-off between supporting economic growth and containing inflation.
Outlook
With oil prices surging, geopolitical risks intensifying, and inflation concerns mounting, markets are likely to remain volatile.
Investors will continue to monitor developments in the Middle East and central bank signals, as both factors play a critical role in shaping the near-term direction of global equities.
