Oil prices climbed and US stocks wavered after Iran fired missiles and drones at Kuwait and Bahrain and American forces carried out fresh strikes on Iranian targets, reviving the geopolitical risk premium that has shadowed markets through the Gulf conflict. West Texas Intermediate crude rose about 2% toward $96 a barrel, while Brent neared $98.
The renewed fighting, including reported US strikes on Qeshm Island and Iranian attacks on the two Gulf monarchies, pulled traders' attention back to the Strait of Hormuz, the narrow waterway through which roughly a fifth of the world's traded oil passes. Any threat to shipping there tends to feed quickly into energy prices, inflation expectations and the broader mood across markets.
Equities were caught between competing forces. Strong corporate earnings and continued enthusiasm for artificial-intelligence stocks had pushed several indexes to record highs in recent sessions, but the surge in oil and the prospect of higher Treasury yields weighed on the Dow Jones Industrial Average and the S&P 500 as the latest escalation unfolded.
Energy producers outperformed as crude rallied, while sectors sensitive to fuel costs, such as airlines, came under pressure. The cross-currents left the major benchmarks close to where they had begun, masking sharp moves beneath the surface as investors repositioned around the conflict.
Analysts noted that the market had repeatedly swung on each turn in the Gulf, rallying when diplomacy appeared to advance and retreating when fighting flared. With Washington still insisting it was pursuing a settlement even as it traded blows with Tehran, the near-term direction looked likely to hinge on whether the exchange escalated or eased.
For now, the risk premium that had drained out of crude during earlier hopes of a deal was being rebuilt. Where prices settle, traders said, will depend less on inventories than on whether the strikes near the Gulf's vital shipping lane prove a passing flare-up or the start of a more sustained disruption.