Oil prices surge after Israel strikes Iran
Crude oil prices surged after Israel launched strikes at Iran.
West Texas Intermediate and Brent crude oil futures both made significant gains.
Oil prices jumped due to concerns over supply disruptions from the Middle East.
Crude oil prices surged on Friday after Israel launched strikes at Iran, prompting fears of energy supply disruptions from the Middle East.
US benchmark West Texas Intermediate crude oil futures jumped as much as 14% late Thursday. They've since come off highs and were trading almost 8% higher at about $73 a barrel at 8:30 a.m. ET.
International benchmark Brent crude oil futures gained as much as 13% and were up about 7% above $74.
JPMorgan analysts wrote on Friday that further Israeli strikes and Iranian retaliation could have a significant impact on global energy markets. "Our comfort zone remains with oil prices in the $60-65 range, as sustained gains in energy prices could have a dire impact on inflation, reversing the months-long trend of cooling consumer prices in the US."
"This has elevated geopolitical uncertainty significantly and requires the oil market to price in a larger risk premium for any potential supply disruptions," wrote Warren Patterson, the head of commodities strategy at ING, on Friday.
The strikes could mean higher gasoline prices and lower the chance of interest rate cuts, said Mohamed El-Erian, chief economic advisor at Allianz and president of Queens' College, Cambridge.
"It's another shock to the stability of the US-led global economic order … whatever way you look at it, it's negative short-term and negative long-term," he told BBC Radio 4.
Iran is the fourth-largest oil producer in the Organization of Petroleum Exporting Countries and has repeatedly threatened to close the Strait of Hormuz, a key oil shipping route for oil and gas that connects the Persian Gulf to the Gulf of Oman.
Nearly a third of global seaborne oil moves through the Strait of Hormuz, wrote Patterson. Qatar, which accounts for one-fifth of the world's liquified natural gas trade, also uses this route to ship the fuel.
"Unfortunately, there is no alternative route," wrote Patterson. "This would leave the global LNG market extremely tight, pushing European gas prices significantly higher."
The sharp upswing in oil comes after a period of lull in the oil markets due to ample supply and slow demand. Until now, crude prices were broadly moving lower this year.
Any sustained rise in energy prices would push up inflation and pump prices at a time of heightened economic uncertainty amid President Donald Trump's import tariffs.
The spike in uncertainty following Israel's strike on Iran is putting a huge damper on market sentiment that had only been recovering recently after volatility in April following "Liberation Day." Just a few days ago, the S&P 500 was near its record high.
Stock market futures were trading lower at 8:30 a.m. ET.
S&P 500 futures: down 0.8% at 5,998 points
Dow futures: down 0.9% at 42,600
Nasdaq futures: down 1.1% at 21,689
"This morning's alarming escalation is a blow to risk sentiment and comes at a crucial time after macro and systematic funds have rebuilt long positions and investor sentiment has rebounded to bullish levels," wrote Tony Sycamore, a market analyst at IG.
Sentiment is likely to worsen ahead of the weekend as investors cut positions to avoid risk, he added.
"Markets are on high alert, justifiably fearing a rapid escalation in the conflict, that may spiral into an unbridled war," wrote Vishnu Varathan, Mizuho's head of macro research for Asia, excluding Japan.
European stock markets opened lower with the Stoxx Europe 600 index down almost 1% and Germany's Dax down 1.5%.
London's FTSE 100 fell 0.4%, with oil major BP up 2.8% and Shell adding 1.6%.
In Asia, Japan's Nikkei 225 closed 0.9% lower. Hong Kong's Hang Seng Index and China's CSI 300 ended down 0.6% and 0.7% respectively.
Traditional haven assets were higher, with spot gold above $3,400 an ounce. US Treasurys rallied, with 10-year bond yields down to 4.35%, their lowest level in a month.
The US dollar index was trading 0.6% higher after hitting a three-year low on Thursday.
Israel's military launched a major preemptive strike against Iran's nuclear program on Friday morning local time. Israeli Prime Minister Benjamin Netanyahu said in a video statement on Friday that the operation will continue "for as many days as it takes."
Netanyahu said Iran had produced enough highly enriched uranium for nine atom bombs, but did not provide any evidence to back his claim. Iran's nuclear program presents "a clear and present danger to Israel's very survival," he added.
Israel's strike on Iran comes as the US was engaging Iran on a deal regarding its nuclear program. In Truth Social posts on Friday, President Donald Trump urged Iran to make a deal, warning of "even more brutal" Israeli attacks if it did not.
Secretary of State Marco Rubio said in a statement on Thursday, after the attack, that Israel had taken "unilateral action" against Iran.
"We are not involved in strikes against Iran and our top priority is protecting American forces in the region," he said.
Read the original article on Business Insider
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Miami Herald
2 hours ago
- Miami Herald
Everyone should keep an eye on this Persian Gulf island
Kharg Island is a small island in the Persian Gulf. It lies 16 miles off the northwest coast of Iran. It's 451 miles from Tehran, Iran's capital - roughly the distance from Detroit to New York City. It is just five miles long, about 40% the size of New York's Manhattan Island. And 125 from Iran's border with Iraq. Don't miss the move: Subscribe to TheStreet's free daily newsletter It is also unique in the Persian Gulf. The island's limestone foundation allows it the luxury of fresh water reserves. Most importantly it also is the key port that exports Iranian crude oil. About 90% of Iran's oil exports flow through Kharg's terminal complex. And about a third of those exports go to China. Related: Stock Market Today: Attacks in Middle East Batter Stocks; Oil and Gold soar; Bitcoin Off Kharg could prove to be one of two key strategic places if the Israeli-Iran War (let's call it that for now) spins out of control. The other is the Strait of Hormuz, 21 miles wide at its narrowest, same as the English Channel. About a third of the world's liquified natural gas and 25% of its crude oil must pass through the strait to pass from the 615-mile Persian Gulf to reach buyers in Europe, Asia and elsewhere. Giant oil tankers with oil and natural gas from Iran, Iraq, Saudi Arabia, the United Arab Oman and Abu Dhabi, Qatar and Bahrain flow though the strait Iran is the northern side of the strait, Oman on the southern. For years, whenever there's a conflict involving Iran, there are fears the country might block the strait. The importance of Kharg and the Strait of Hormuz helps explain why crude oil prices shot up as much as 14% late Thursday on the very first reports of Israel's attack on Iranian military and nuclear facilities. Related: Tesla makes a desperate move as it continues to lose customers Ultimately, West Texas Intermediate, the benchmark U.S. crude closed Friday up 7% to $71.29, and Brent, the benchmark global crude, was up the same amount to $74.23. If the worst of the conflict scenarios come to pass - Kharg's terminals and the strait are shut down, all bets are off on oil prices and, by extension, natural gas and gasoline prices. Kharg's terminal were blown up during the Iraq-Iran War of 1980-1988. If it happened again, Reuters reported, some analysts were suggesting crude prices could top $120 a barrel or higher, which would send gasoline prices much higher, maybe up to the top U.S. average price of $5.22 a gallon in May 2022. Global economies would be disrupted, and inflation would almost certainly jump. AAA's daily U.S. average gasoline price was up a penny to $3.133 a gallon on Saturday. The price is up just 3.1% so far in 2025.U.S. oil and gas stocks jumped on the Israeli-Iran news Friday. The Energy Sector of the Standard & Poor's 500 Index was alone among the 11 sectors of the index to post a gain for the day. Related: Starbucks CEO admits the struggling chain made a major mistake The Energy Select Sector SPDR exchange-traded fund (XLE) , which matches the index's Energy Sector, was up 1.7%. Oil services giant Halliburton (HAL) was up 5.5%. APA Corp. (APA) , parent of oil-and-gas producer Apache, was up 5.3%. The S&P 500 was down 1.13%. The Dow Jones Industrial Average, down as many as 887 points in the afternoon, finished with a 700-point loss, or 1.8%, to 42,198. The major stock indexes - Dow, S&P 500, Nasdaq Composite, Nasdaq-100 and Russell 2000 - all finished lower on the week. More Economic Analysis: Hedge-fund manager sees U.S. becoming GreeceA critical industry is slamming the economyReports may show whether the economy is toughing out the tariffs That said, many analysts do not believe things will get that out of hand. Similar worries about Kharg and the Strait of Hormuz have generated similar worries and price projections. But, in a note on Friday, Amarpreet Singh, an analyst with Barclay's, said "cool heads have prevailed." Moreover, as Ian Bremmer, president of the Eurasia Group, a consulting firm that watches matters like these, thinks Iran has few cards to play in this conflict. Israeli intelligence capabilities are just too capable, he said on a podcast, and Iran's military capacity has been diminished substantially by the attacks this week. Still, attention must be paid. Most definitely. Related: Veteran fund manager issues dire stock market warning The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
2 hours ago
- Yahoo
The "Magnificent Seven" Are Still Growing Faster Than the Rest of the S&P 500. Here's When That Could Change, According to Wall Street Analysts.
The "Magnificent Seven" produced far better earnings growth than the rest of the market in the first quarter. Amazon and Alphabet were the biggest contributors to the outperformance. Investors will have to consider valuation as the rest of the market catches up with the Magnificent Seven. 10 stocks we like better than Nvidia › The S&P 500 (SNPINDEX: ^GSPC) has produced phenomenal returns over the last two and a half years since the bottom of the 2022 bear market. The index is up nearly 70% since Oct. 2022, but much of that gain has been driven by just a handful of stocks. The "Magnificent Seven" have, for the most part, outperformed the benchmark over that period, and there's a clear reason why. As a group, the Magnificent Seven have produced much better earnings growth than the rest of the S&P 500. Not only that, they've consistently beaten high earnings expectations. That trend continued in the first quarter, but analysts are starting to think their phenomenal run of outperforming everything else in the market may come to an end soon. Here's what investors need to know. After Nvidia (NASDAQ: NVDA) released its quarterly earnings on May 28, FactSet reported the Magnificent Seven grew earnings 27.7% in aggregate. That massively outperformed analysts' expectations of 16.0% earnings growth for the group. Here's how it breaks down: Amazon (NASDAQ: AMZN): $1.59 earnings per share (EPS) vs. $1.36 expected, up 62% year over year. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL): $2.81 EPS vs. $2.01 expected, up 49% year over year. Meta Platforms: $6.43 EPS vs. $5.22 expected, up 37% year over year. Nvidia: $0.81 EPS vs. $0.75 expected, up 33% year over year. Microsoft: $3.46 EPS vs. $3.22 expected, up 18% year over year. Apple: $1.65 EPS vs. $1.62 expected, up 8% year over year. Tesla (NASDAQ: TSLA): $0.27 EPS vs. $0.41 expected, down 40% year over year. Six out of the seven outperformed expectations, and five of them grew earnings faster than the other 493 companies in the S&P 500 (9.4%). But as you can see, the level of outperformance and year-over-year growth varies widely from company to company. The weakest showing was most obviously from Tesla, which has suffered from political backlash against CEO Elon Musk, combined with rising competition from Chinese automaker BYD. As a result, deliveries dropped 13% year over year in the first quarter while average selling price also declined. The company's ramp-up in AI spending to support its forthcoming autonomous vehicle efforts also weighed on earnings results. On the other side of the spectrum, Amazon and Alphabet exhibited impressive earnings growth on the back of their cloud-computing businesses. Amazon Web Services grew sales 17% year over year, while its margin expanded to 39.5% (up from 37.6% a year ago). Google Cloud grew sales 28% with its operating margin expanding to 17.8% from 9.4% a year ago. The high-margin Google advertising business continued to produce strong growth as well. Nvidia felt the pain of restrictions on sales of its GPUs to China, but the company still managed to produce very strong earnings growth last quarter. Without the impact of the write-off in excess inventory and purchase obligations of its H20 GPUs designed for China and the related tax impact, earnings growth would have been 57% . Though Tesla is the only one showing weakness at the moment, the rest of the group's outperformance isn't going to last forever. While analysts expect the group to continue beating the rest of the market in terms of earnings growth through the end of 2025, difficult comparisons and better performance among the rest of the stocks in the S&P 500 could present a challenge for 2026. As such, analysts currently forecast first-quarter 2026 earnings growth of 10.2% for the Magnificent Seven as a group, but the rest of the 493 companies will generate an average of 10.3% earnings growth. That forecast has some important implications for investors, even if it ultimately proves inaccurate (as is almost always the case for forecasts a year out). The first is investors will need to be more discriminating among the seven stocks going forward. We've already seen Tesla stock falter, and Apple, despite beating expectations, has seen its stock hit hard by tariff pressure. Even if investors expect strong results from one of the businesses going forward, valuation will matter more as earnings growth slows down. Alphabet is currently the only member of the group with a forward price-to-earnings ratio below 25 (it sports an extremely attractive 18.5x multiple). The second is that there may be a lot more growth opportunities among the smaller members of the S&P 500. While analysts expect growth for the group to continue trailing the Magnificent Seven through the end of the year, that won't be true of every company. It's possible to find those companies trading at a fair value despite strong growth prospects outside of the Magnificent Seven. Another option is to buy an equal-weight S&P 500 index fund like the Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP). The fund invests evenly across all 500 constituents of the S&P 500, rebalancing on a quarterly basis. That ensures you capture just as much upside from smaller businesses as you do from the biggest companies in the index. As the tide turns and we start to see more parity in the market, investors should expect a stronger showing over the next year (or longer) from smaller names in the stock market. Meanwhile, many of the Magnificent Seven are starting to look expensive relative to their future earnings growth prospects as analysts' expectations come down. It may be worth selling off some to invest in new opportunities. Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,702!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $870,207!* Now, it's worth noting Stock Advisor's total average return is 988% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adam Levy has positions in Alphabet, Amazon, Apple, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends BYD Company and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. The "Magnificent Seven" Are Still Growing Faster Than the Rest of the S&P 500. Here's When That Could Change, According to Wall Street Analysts. was originally published by The Motley Fool
New York Post
2 hours ago
- New York Post
The Israel-Iran conflict is shaking the markets — but nervous investors aren't panicking
Wall Street's myopia was on full display in the immediate aftermath of the Israeli airstrikes against Iran. Many of us were worried about the possibility of World War III as we saw the attacks almost in real time Thursday night. Many of my sources were trying to gauge impacts on the Dow, oil prices and interest rates. Advertisement You can make a good case that there is a place for such shortsightedness. Leave the far-reaching geopolitical analysis to those who are better equipped to game-plan those outcomes, and the investor class should stay in its lane. People still have to save for retirement, invest those savings, even if the Middle East is imploding. Advertisement That said, the Wall Street take on the contretemps is certainly worth dissecting. You can glean, if you look through the conflict's short-term impact on specific pieces of economic data and push the smart money on their meaning, some interesting broader conclusions about how the Israel-Iran conflict will ultimately shake out. The market's top-line response was muddled. Stocks initially sold off sharply, then came back only to tank into the close as Iran retaliated against Tel Aviv. Advertisement Oil prices — which are always sensitive to conflicts in the Middle East — jumped about 7%. But we've all seen worse on less existentially serious stuff. The Dow closed down less than 800 points; the rollout of the Trump tariff plan — before Treasury Secretary Scott Bessent began putting the old genie back in the bottle to prevent an economic meltdown — saw far more wild moves in all sorts of investments. When the trade war was raging, bond prices at one point tanked so much, you would think we were on the verge of the apocalypse. Advertisement On Friday, the 10-year bond yield rose but is still below 4.5%, meaning people weren't rushing to the safe haven of Treasuries to plan for the worst. Gold rallied, but it's been running hot for weeks amid the fears of tariff-induced inflation. Not panicking In other words, it seems like investors are nervous, but also they're not panicking because something good could follow something scary. Namely, Israel neutered not just a foe that is developing nukes and threatening its destruction. It also has degraded the world's most aggressively belligerent nation — the leading state sponsor of terrorism — by decapitating much of Iran's military leadership, key scientists that were on the verge of developing nukes, as well as large swaths of its armed forces. In saving itself, Israel did us all a favor — even the Arab world, much of which abhors Iran's destabilizing militarism. For investors, it could mean at the very least lower energy prices in the future. Rich Arab countries finally might agree to recognize Israel, and the investment opportunities that will bring. Advertisement I know saying the conflict could be long-term good for the markets sounds ignorant given what's at stake. But life isn't mostly binary. Fortunately in this case, what's good for stocks could be good for the world. Of course, one day in the market is just one day. Advertisement So much more will happen. Israel says it's not done with its military action. Iran retaliated, landing missiles in the heart of Tel Aviv after a first wave of deadly drones was largely swatted away by Israel's defenses. Advertisement I have family in Israel so I pray for their safety as I've done almost every day since Oct. 7. US military installations could be attacked. But some of my trading desk sources are pointing out that Israel seems to have its game plan down pretty solid, and the Iranian attack against us would be foolish since it already has its hands full. The Israelis knew who to take out — the generals and scientists — and it clearly knew how Iran could respond. It has already largely eliminated Iran's proxies, Hezbollah and Hamas. Advertisement Notice how Israel didn't take out Iran's oil infrastructure, at least not yet. If it did, oil prices would be higher and markets far more volatile. And maybe Israel Prime Minister Benjamin Netanyahu is betting on the Iranian people. I've never been to Iran, but I know plenty of Iranian Americans. They tell me the country is largely secular, run by a fanatical minority that Israel might be weakening significantly. This could be the push for regime change that we've been talking about for years. Trump kept in the loop President Trump here has been at his best, my Wall Street sources remind me, another reason they're not panic-selling. Israel kept him in the loop. He alerted the world that the attacks would happen Thursday. He then began distancing himself and our country from the direct conflict, while prodding Iran to get back to the negotiating table and end its nukes program. Who knows, they might finally listen. Wall Street is always looking for 'black swan' events — stuff most people don't see that could lead to catastrophic market results. Wars are terrible. It would be great if Iran chose peace, but maybe eliminating it as a threat to Israel and a lot more is a black swan that produces some long-term peace and prosperity. Let's hope so and pray for the peace dividend it should deliver.
