International oil prices have experienced a significant surge, driven by a combination of factors including U.S. President Donald Trump’s recent threat to target Iran’s oil fields, power plants, and Kharg Island if the Strait of Hormuz remains closed. This has created heightened geopolitical tensions in the region, which in turn has influenced global markets. The U.S. West Texas Intermediate (WTI) crude oil surpassed $100 per barrel for the first time since July 2022, while Brent crude reached approximately $117 per barrel during trading sessions.
On the same day, the New York stock market showed a brief upward trend following remarks from Jerome Powell, the Chair of the Federal Reserve, who indicated that there would be no immediate changes to monetary policy. However, the market ultimately closed mixed as rising oil prices began to weigh on investor sentiment.
On the 30th, local time, Brent crude, the global benchmark, closed at $112.78 per barrel, marking an increase of 0.19%. During the trading session, it briefly climbed to $116.89, approaching its highest level since the start of the Iran conflict. This represents a remarkable 55% surge for Brent crude this month, the largest increase since 1988. The previous monthly record was 46% in September 1990 during the First Gulf War. WTI crude also closed at $102.88 per barrel, up 3.25%, with a monthly increase of approximately 53%, expected to be the highest since May 2020.
The sharp rise in oil prices can be attributed in part to President Trump’s comments on social media. He stated, “If an agreement is not reached, though it probably will be, and the Strait of Hormuz does not immediately return to normal passage, we will bomb and completely annihilate all of Iran’s power plants, oil fields, and Kharg Island, which we have intentionally avoided targeting until now.” According to the Financial Times, the market reacted cautiously to these remarks.
The Wall Street Journal noted that weakening expectations for a ceasefire were reflected in the increased presence of U.S. troops in the Middle East and the involvement of Yemeni Houthi rebels in the conflict.
The New York stock market saw multiple shifts in direction throughout the day. Initially declining, the market briefly turned positive after Powell’s statements suggested no immediate changes to monetary policy. However, as oil prices continued to climb, concerns about inflation resurfaced, leading to a mixed closing. The Dow Jones Industrial Average rose 0.1%, while the S&P 500 Index fell 0.4% and the Nasdaq Composite dropped 0.7%. The underperformance of technology stocks contributed to the overall decline.
Both the S&P 500 Index and the Nasdaq Composite have declined by 7.8% and 8.6%, respectively, this month, potentially marking their largest monthly declines since the end of 2022. According to Bloomberg, only 62 components of the S&P 500 Index have seen gains since the start of the Iran conflict.
Despite the volatility in the stock market, U.S. Treasury yields decreased as Powell’s remarks eased concerns about short-term interest rate hikes. The yield on the 2-year U.S. Treasury note fell by 0.09 percentage points to 3.82%, while the yield on the 10-year note dropped 0.10 percentage points to 4.34%.
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