Oil Spikes to Highest Price Since Summer 2024

The Dow Jones Industrial Average briefly dropped more than 1,100 points on Thursday after the price of oil spiked to its highest level since the summer of 2024. The Dow lost as many as 1,160 points Thursday before finishing the day with a drop of 784 points, or 1.6%, to 47,954.74.

• The S&P 500 fell 38.79 points, or 0.6%, to 6,830.71.
• The Nasdaq composite fell 58.50 points, or 0.3%, to 22,748.99

Worries are rising that a long-term spike in oil prices because of the war with Iran could exhaust households' ability to spend, grind down the global economy, and push interest rates higher, the AP reports.

The price for a barrel of benchmark US crude shot up 8.5% to settle at $81.01 per barrel. Brent crude, the international standard, climbed 4.9% to $85.41 per barrel and is also near its highest price since two summers ago. The jumps came after Iran launched a new wave of attacks against Israel, American bases, and countries around the region. The war's escalations are raising worries about how long disruptions will last in the region for the production and transport of oil and natural gas. Prices at US gasoline pumps have already jumped. The average price for a gallon is $3.25, up 9% from $2.98 a week ago, according to auto club AAA.

Stocks of airlines fell to some of the US market's worst losses on Thursday. Higher oil prices are increasing their already big fuel bills, while the war has left hundreds of thousands of passengers stranded across the Middle East. American Airlines lost 5.4%, United Airlines fell 5%, and Delta Air Lines sank 3.9%. Wall Street's drop would have been worse if not for Broadcom. The chip company's stock rose 4.8% after it reported stronger profit and revenue for the latest quarter than analysts expected. It's one of Wall Street's most influential stocks because it's one of the biggest by total value, and CEO Hock Tan said it benefited from a 74% jump in revenue for AI chips.

The US stock market has a history of bouncing back relatively quickly following conflicts in the Middle East and elsewhere. That has many professional investors suggesting patience and riding through the market's swings. But if oil prices spike, like to $100 per barrel, and stay there, it could be too much for the global economy to withstand. Uncertainty about that has caused frenetic swings across financial markets this week, sometimes hour by hour.