Around April 7, 2026, intensifying conflict in the Middle East regarding US-Iran relations led to a dip in stock markets and a rise in oil prices. Risk appetite was curbed by fears that an escalation of the conflict could heighten an energy squeeze and endanger the global economy. This resulted in the S&P 500 halting a four-day advance.
Earlier, on April 1, 2026, stocks initially saw sharp declines but later reversed to close higher, as investors monitored developments around the Strait of Hormuz and the Middle East war. Oil prices maintained significant gains, with West Texas Intermediate up 12% at around $112 per barrel. The S&P 500 Index closed up 0.1% after an earlier tumble, and the Nasdaq 100 also ended 0.1% higher, rebounding from a deep loss.
Throughout March and April 2026, the ongoing war in the Middle East and its impact on oil supply, particularly concerning the Strait of Hormuz, caused market jitters. Oil surges stoked inflation fears, which in turn impacted bonds by diminishing the odds for a rate cut. The dollar rose, and while stocks erased losses, several tech firms with solid balance sheets rallied, while airlines sank. Gold topped $5,300.
By late May 2026, US strikes on Iranian targets further fueled oil price increases, despite President Trump's earlier statements about negotiations to reopen the Strait of Hormuz proceeding "nicely." Reports of US-Israeli strikes targeting Iranian vessels in the Strait of Hormuz, causing loud explosions, suggested an unstable situation, with markets anticipating potential retaliatory strikes. Conversely, at other times, speculation about an end to the war caused oil to plunge to around $90 a barrel, with the S&P 500 reaching a fresh record and achieving its biggest weekly advance since 2020.
