Oil jumps to US$100 per barrel and stocks sink worldwide with no clear end in sight for Iran war

NEW YORK (AP) — With no clear end in sight, the war with Iran sent oil prices back to $100 per barrel on Thursday, and stocks sank worldwide.

The S&P 500 fell 1.4% and resumed its sharp swings following a couple days of relative calm.

The Dow Jones Industrial Average was down 674 points, or 1.3%, with an hour remaining in trading, and the Nasdaq composite was 1.6% lower.

The centre of action was again the oil market, where the price of a barrel of Brent crude, the international standard, climbed 9.2% to settle at US$100.46. Worries are worsening that the war could block the production of oil in the Persian Gulf for a long time and cause a debilitating surge of inflation for the global economy.

Iran’s new supreme leader released his first statement Thursday since succeeding his late father, saying his country would keep up attacks on Gulf Arab neighbours and use the effective closure of the Strait of Hormuz as leverage against the United States and Israel.

A fifth of the world’s oil typically sails through the strait, and oil producers in the region are cutting production because their crude has nowhere to go.

Countries around the world are trying to make up for that, and the International Energy Agency said Wednesday that its members would release a record amount of oil, 400 million barrels, from stockpiles built for such emergencies.

But such moves are short-term fixes, and they do not clear the long-term risks. Analysts have said that if the Strait of Hormuz remains closed, oil prices could jump to $150.

To be sure, the US stock market has a history of bouncing back relatively quickly from military conflicts in the Middle East and elsewhere, as long as oil prices don’t stay too high for too long. Even with all the up- and- down swings of the last couple weeks, many rocking markets hour to hour, the S&P 500 is only about 4% below its all-time high set in January.

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