U.S. Stocks Fall as Oil Price Surge and Iran Conflict Weigh on Markets
U.S. stock markets declined on Thursday as a sharp rise in oil prices unsettled investors. Concerns over disruptions to global tanker traffic caused by the ongoing Iran conflict overshadowed global efforts to release record volumes of strategic oil reserves aimed at stabilizing energy markets.
By 14:51 ET (18:51 GMT), the S&P 500 dropped 1.3% to 6,689.49, while the Nasdaq Composite fell 1.5% to 22,367.68. The Dow Jones Industrial Average also declined 1.3%, reaching 46,782.62 points.
The losses followed a mixed trading session on Wednesday. During that session, the Dow Jones closed at its lowest level of the year, the S&P 500 ended slightly lower, and the Nasdaq managed to post modest gains. Earlier market optimism fueled by strong earnings from cloud computing company Oracle was offset by uncertainty surrounding the war in the Middle East.
Strait of Hormuz Closure Weighs on Investor Sentiment
Market sentiment was further pressured by the effective shutdown of shipping through the Strait of Hormuz, a key global energy transport route bordered largely by Iran.
Shipping companies have significantly reduced traffic through the narrow waterway due to security concerns and insurance challenges. The strait normally carries around 20% of the world’s oil and liquefied natural gas shipments, making it one of the most important energy chokepoints in global trade.
Iran’s official news agency quoted the country’s new leader Mojtaba Khamenei, stating that the Strait of Hormuz must remain closed.
Recent attacks on commercial vessels have intensified concerns about supply disruptions. Maritime authorities reported that three ships were targeted in separate incidents, including two vessels that caught fire near Iraq’s coastline and another ship struck near the Strait.
Following the attacks, Iraq and Oman moved to shut down several oil terminals, raising further fears about potential disruptions to global energy flows.
Meanwhile, President Donald Trump commented that the United States could benefit from higher oil prices due to its status as the world’s largest oil producer.
Historic Oil Supply Disruption Warning
The International Energy Agency (IEA) warned that the Middle East conflict could lead to the largest supply disruption in the history of the global oil market. The agency recently announced its largest-ever coordinated release of strategic oil reserves, while also lowering its outlook for global oil supply.
The joint military campaign by the United States and Israel against Iran, which began more than a week ago, has caused significant volatility in oil markets and revived concerns about rising global inflation.
Higher energy prices could force central banks, including the U.S. Federal Reserve, to reconsider potential interest rate cuts, which has already pushed bond yields higher and reduced the attractiveness of equities.
At the latest check, Brent crude oil had surged 9.9% to $101.08 per barrel, after briefly approaching $120 per barrel earlier in the week.
Reports also suggested that the Trump administration is considering a waiver of the Jones Act, a U.S. shipping law that governs domestic transport of goods, in order to facilitate the movement of fuel across the country.
Jobless Claims Point to Stable Labor Market
Economic data released Thursday showed U.S. initial jobless claims fell to 212,000, coming in below market expectations. The reading follows last week’s weaker February nonfarm payrolls report.
According to JPMorgan economist Michael Hanson, jobless claims have remained within a stable range for most of the year, suggesting a relatively balanced labor market environment.
Hanson said the data indicates a “low-hire, low-fire” labor market, meaning hiring and layoffs are both occurring at modest levels. This suggests that the broader labor market remains resilient despite recent economic uncertainties.
However, he cautioned that rising energy prices driven by geopolitical tensions in the Middle East could pose risks to economic growth and employment trends.
U.S. Trade Deficit Narrows as Exports Reach Record Levels
Separate data released on Thursday showed that the U.S. trade deficit narrowed significantly in January, driven by a surge in exports and a decline in imports.
Exports reached a record high, helping to improve the overall trade balance.
Investors Watch Adobe Earnings
Beyond geopolitical tensions, investors are also closely monitoring upcoming earnings from software giant Adobe.
The company has faced increasing scrutiny from investors as artificial intelligence technologies reshape the software industry. While AI was initially expected to boost the sector, new tools and automation capabilities are now raising concerns about potential disruption across various software-as-a-service (SaaS) companies.
The S&P 500 Information Technology sector has already declined more than 3% this year, reversing some of the strong gains recorded in 2025.
Adobe’s stock reflects this trend, falling over 17% since the start of the year.
The company has been actively integrating AI features into its products through tools such as Firefly and Adobe Express, which allow users to generate images and videos directly within its Creative Cloud platform.
Despite industry concerns, Adobe has forecast strong financial results for fiscal year 2026, projecting annual revenue between $25.90 billion and $26.10 billion, with earnings per share expected between $23.30 and $23.50.
Dollar General Shares Decline
Elsewhere in the retail sector, shares of Dollar General fell after the company issued a forecast for comparable annual sales that came in below Wall Street expectations.
