Oil futures surged Monday after the United States and Israel launched strikes against Iran over the weekend, with the conflict spilling over into the wider Middle East region.
US crude jumped 7.5%. Brent crude, the international benchmark, spiked 6.2% to trade at around $77 a barrel, having briefly surpassed $82 earlier in the trading session. Oil prices had already been rising in anticipation of an attack on Iran.
Meanwhile, stock futures fell. Futures for the S&P 500, the Nasdaq and the Dow were all down more than 1%. But Exxon and Chevron shares rose pre-market as high oil prices tend to boost oil companies’ profits. Defense stocks, like Northrop Grumman and Lockheed Martin, were also up strongly.
Traders are betting that the current disruption to the oil market because of the strikes will be relatively brief. But significant uncertainty remains about the scope and timeframe for the war, which US President Donald Trump suggested could last weeks.
Large-scale unrest, a chaotic power vacuum, strikes that take out oil production, or a prolonged shutdown of a critical oil shipping channel could eventually send oil to $100 a barrel or even higher, industry analysts warn.
If that happens — and the market is currently betting against that scenario — gasoline prices could go through the roof. That could force Americans to pay a price for regime change in Iran, exacerbating affordability concerns.
PERCEPTION RESET 