The price of oil jumped sharply and stock futures tumbled Sunday evening as traders digested renewed tensions between the U.S. and Iran over the critical Strait of Hormuz.
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U.S. crude oil jumped more than 7%, to about $90 per barrel, and international Brent crude oil rose 5%, to around $95 per barrel.
S&P 500 futures dropped nearly 0.8%, Nasdaq 100 futures fell 0.7%, and Dow futures tumbled 500 points, or 0.7%. Russell 2000 futures slid 1.4%.
Wholesale gas prices also rose by more than 4%, and heating oil futures, which are a proxy for jet fuel prices, also spiked 7%. Natural gas prices rose 2%.
The moves adds to weeks of dramatic ups and downs as investors have tried to digest the almost daily swings between war and peace. While major U.S. stock indexes had recently recovered all loses incurred since the war began, oil prices have remained elevated, costing consumers more at the gas pump and pushing inflation higher.
Of particular concern is the Strait of Hormuz, the crucial waterway off Iran, where more than 20% of the world’s oil supply normally passes.
Iran declared the strait open for commercial vessels Friday — which sent oil prices plummeting 11% — but then walked back the statement over the weekend as it accused the U.S. of only “partially implementing the ceasefire.”
Iran declared the strait closed again, and dozens of commercial ships that tried to exit the strait turned back around and remain trapped west of the crucial passage.
Shipping giant CMA CGM said one of its ships came under fire Saturday. “CMA CGM confirms that one of its vessels was the subject of warning shots yesterday,” a spokesperson told NBC News on Sunday. “The crew is safe and unharmed.”
President Donald Trump also said Iran had attacked ships.
“Iran decided to fire bullets yesterday in the Strait of Hormuz — A Total Violation of our Ceasefire Agreement,” Trump wrote Sunday morning on Truth Social. “Many of them were aimed at a French Ship, and a Freighter from the United Kingdom.”
Escalating tensions even further, Trump later said the U.S. military had “blown a hole” in the engine room of an Iranian ship that “tried to get past our Naval Blockade.”
“Right now, U.S. Marines have custody of the vessel,” he said.
U.S. Central Command published video of shots being fired at the vessel from a U.S. Navy guided missile destroyer and added that Marines have boarded the vessel.
“Iran will soon respond to this act of armed piracy and theft by the America military and will retaliate,” a spokesperson for Iran’s armed forces said on state TV.
No commercial ships were recorded crossing the strait Sunday as the latest developments played out, according to data from the maritime tracking firm Kpler.
Traders were also closely watching the status of peace talks between the U.S. and Iran, which Trump said Sunday morning were set to take place in Islamabad.
“My Representatives are going to Islamabad, Pakistan — They will be there tomorrow evening, for Negotiations,” he said.
But later, Iranian state media said that “the reports published about a second round of negotiations in Islamabad are not true.” As of Sunday night, further details remained unclear.