Oil futures surged nearly 9% on Monday as renewed conflict between the United States and Iran threatened the flow of oil through the Strait of Hormuz. Brent crude settled at $83.30 per barrel, a 9.6% increase, while U.S. crude rose 9.4% to $78.14 a barrel. This surge was triggered by Iran's closure of the strait and President Trump's subsequent reinstatement of a blockade on Iranian shipping, along with a demand for 20% payments on all cargo for protection.
The escalating tensions and rising oil prices have fanned concerns about inflation, prompting investors to anticipate a more aggressive stance from the Federal Reserve. The yield on the benchmark U.S. 10-year note climbed to 4.62% from 4.569%, and the two-year note's yield, sensitive to Fed rate expectations, rose to 4.275%, its highest since February 2025. Markets now assign a 73% probability to a September rate hike, up from 60% a week ago.
On Wall Street, stocks fell across the board, with the Nasdaq Composite leading declines, down 1.6% to 25,873.18. The S&P 500 dropped 0.8% to 7,515.34, and the Dow Jones Industrial Average fell 0.3% to 52,498.64. Technology shares, particularly semiconductor stocks, were the weakest sector. The U.S. dollar index strengthened by 0.26% to 101.32. Precious metals like gold and silver also saw declines, with spot gold falling 3% to $3,998.52 an ounce and spot silver down 3.8% to $57.56 an ounce, largely due to worries about prolonged higher U.S. interest rates.
