The S&P 500 Index closed down 0.94% on Tuesday, hitting a 3.25-month low, while the Dow Jones Industrial Average fell 0.83% to a 2.75-month low, and the Nasdaq 100 decreased 1.09% to a 3.5-month low. Global stock markets retreated amid ongoing tensions from the Iran conflict, leading to increased crude oil prices and bond yields. WTI crude oil surged over 4% to an 8.5-month high as geopolitical pressures raised inflation concerns.
The conflict has prompted the U.S. to provide risk insurance for maritime trade and consider deploying Navy escorts for tankers in the Strait of Hormuz, which is critical for oil transport, accounting for a fifth of the world’s oil supply. Bloomberg estimates that the real-time risk premium for crude oil is approximately $18 per barrel due to fears of tanker disruptions. Additionally, European natural gas prices spiked over 22% to a three-year high following an attack on Qatar’s Ras Laffan plant, which handles about 20% of global LNG supply.
