Iran Tensions Jolt Stocks and Oil Markets

Iran has rejected a U.S. proposal for a 30-day ceasefire aimed at ending the war that has unsettled energy markets, saying it would end the war on its own terms. The move has intensified a public war of words, with President Donald Trump threatening more devastating attacks and urging Iran to “get serious” before it is “too late.”

Reports indicate Iran has responded to a broader 15‑point U.S. peace plan with a five‑point counterproposal focused on ending aggression, securing guarantees against renewed conflict, financial compensation, and a halt to hostilities on all fronts, including between Israel and Hezbollah and possibly Hamas. However, the sides remain far apart and skepticism over a truce is weighing on sentiment.

Military attacks by the U.S. and Israel on Iran have prompted Tehran to retaliate against the oil market, including strikes on tankers exiting the Persian Gulf via the Strait of Hormuz. Before the war, the strait carried about 20% of global oil and liquefied natural gas trade, but insurance concerns and attacks have sharply reduced traffic.

Brent crude (UKOIL), which started the year near $60 a barrel, has approached $120 at times and is now firmly above $100. Recent quotes put Brent (UKOIL) around $97 to $108, with West Texas Intermediate (USOIL) near $90 to $94. Brent (UKOIL) is up roughly 60% year‑to‑date, while WTI has gained about 57.6%.

Iran has also targeted regional energy infrastructure, notably in Qatar, where two of 14 LNG trains and two gas‑to‑liquids plants were damaged, sidelining an estimated 17% of Qatar’s production capacity for three to five years. The International Energy Agency has described the conflict as the largest oil supply disruption on record, citing damage at more than 40 sites across nine Middle Eastern countries.

U.S. equities slid on Thursday as investors digested the latest ceasefire setbacks and oil spike. The S&P 500 (SPX) fell between 0.8% and 1.5%, the Nasdaq Composite dropped between 1.1% and 2%, and the Dow Jones Industrial Average (DJIA) declined about 0.4% to 0.9%. A separate report noted broad U.S. index losses following Iran’s rejection of the Trump administration’s peace efforts.

European markets mirrored the weakness, with London’s FTSE 100 (UKX) down 1.3%, the CAC 40 (FRA40) in Paris off 1.0%, and Frankfurt’s DAX 40 down 1.5%. A global risk‑off move was also visible earlier in the day, as Asian and European indexes sold off while oil pushed past $100.

Sector moves were uneven. Energy shares outperformed in some markets, with BP up 2.8% and Shell 1.2% as Brent rose. In contrast, U.S. chipmakers and megacap tech names, including Meta (META), Alphabet (GOOGL) and memory suppliers such as Sandisk and Micron (MU), came under pressure, partly on concerns about a new Google compression technique that could lower AI memory needs.

BlackRock (BLK) CEO Larry Fink warned that if tensions around Iran persist, oil prices could surge to $150 a barrel and stay well above $100 even after the war ends, given ongoing threats to trade through the Strait of Hormuz. He argued such levels would carry major global economic implications and sharply raise recession risks.

Other analysts see rising U.S. recession odds as the oil rally strains growth. EY‑Parthenon’s Gregory Daco estimates a 40% probability of a U.S. downturn, while Goldman Sachs (GS) has raised its recession odds to 30% from 25%, citing geopolitical tensions and an oil shock as key catalysts.

The OECD has lifted its 2026 G‑20 inflation forecast to 4.0% from 2.8% and expects UK inflation to average 4% in 2026, among the highest in the G7. Higher crude prices have pushed sovereign yields up, with the U.S. 10‑year Treasury around 4.36% to 4.38%, while the labor market remains firm, as weekly U.S. jobless claims held near 210,000 and continuing claims fell to a 1.75‑year low.

Despite a roughly 70% jump in Brent this year, major oil stocks such as ExxonMobil (XOM) and Chevron (CVX) have risen by a more modest 35% plus, reflecting expectations that prices could retreat once the conflict eases. Futures for Brent expiring in the fall trade in the mid‑$80s, below current spot levels.

Analysts note that a prolonged conflict and sustained triple‑digit crude prices could further boost earnings for large integrated producers. At the same time, broader equity benchmarks are showing technical strain, with the S&P 500 (SPX) dipping below its 200‑day moving average and financials underperforming, as investors watch for any progress on a peace deal and potential reopening of the Strait of Hormuz.