Oil surges, stocks sink on jitters over US plans in Iran war

Oil prices surged on Thursday after reports surfaced suggesting the United States might launch additional attacks on Iran prior to the November midterm elections. This potential escalation raised concerns about possible supply disruptions in the oil market. However, the price surge was tempered by U.S. President Donald Trump's declaration that he would not initiate military action against Iran before the elections.

Trump stated that Washington was engaged in productive talks with Tehran. Brent North Sea crude, the global benchmark, climbed as high as $105.88 a barrel before settling at $103.65, marking an increase of over 58% in the past year. The main U.S. contract, West Texas Intermediate, due for November delivery, rose to $93.20 per barrel but closed at $91.49, up 3.64% for the day.

The Atlantic reported that the White House had solicited the Pentagon to devise strike options against Iran before the midterms. However, with Trump's Republican party potentially losing both chambers of Congress, an escalation in the U.S.-Iran conflict could exacerbate the situation further. Americans are already facing record-high diesel prices.

Following the energy cost surge, Trump announced on his Truth Social platform that the U.S. would not attack Iran prior to the midterm elections. Despite this assurance, oil markets reacted to the prospect of increased attacks on traffic through the Strait of Hormuz and the impending Hurricane Isaias, which could disrupt oil production in the Gulf of Mexico.

Meanwhile, Yemen's Houthi rebels targeted Riyadh airport with missiles and cautioned oil facility staff in Saudi Arabia to evacuate to avoid potential attacks. The renewed rise in oil prices has heightened inflation worries and put upward pressure on bond yields, which have reached levels not seen in over two decades as investors fear persistent inflation will compel central banks to raise interest rates, potentially slowing economic growth and harming equity market valuations.

The oil price surge adversely impacted stock markets, with most major indexes closing lower on Wednesday. European markets, including London, underperformed, although higher oil prices benefited energy companies. In Asia, leading stock markets mirrored Wall Street's losses, with technology firms trailing from recent gains. Shares in Samsung suffered as the South Korean company announced a significant increase in quarterly profit, though it fell short of market expectations.

Wall Street firms, including SpaceX and OpenAI, also experienced declines due to reports of their financial strategies.