Global crude oil prices surged by about 8% and stocks fell as the war with Iran enters its third day.
Brent crude, the global benchmark, was trading in the high $70s on Monday morning following the effective halt of tanker traffic through the Strait of Hormuz.
That's a sharp rise from before the U.S. and Israel attacked, but far from a worse-case scenario. Analysts have warned that prices could top $100 a barrel if oil trade is disrupted for a prolonged period of time, or if the war spills over into neighboring countries and destroys oil infrastructure. Saudi Arabia says it has shot down drones targeting an oil refinery, while Qatar Energy says two natural gas facilities have been attacked.
Meanwhile, stock markets declined, with the Dow Jones Industrial Average falling over 400 points and the S&P 500 losing 0.7% as of early trading on Monday. Investors worry that a spike in energy prices could lead to higher inflation at a time when price gains seemed to have been slowly moderating.
Gasoline prices likely to rise; natural gas spikes
Global energy markets were closed on Saturday when the U.S. and Israel attacked Iran. When trading opened on Sunday night, prices briefly topped $80 a barrel before settling slightly.
Patrick de Haan, an analyst with the app GasBuddy, estimates that in the next few days the spike in crude oil prices will push U.S. gasoline prices up by 10-30 cents on average, with some individual stations seeing prices rise as much as 85 cents.
About 20% of global oil consumption passes through the Strait of Hormuz. Four vessels have been hit in Gulf waters since the conflict began; with shipping companies and their insurers concerned about vessel safety, tankers are not risking passage through the Strait.
Meanwhile, the Strait is also a key chokepoint for trade of liquefied natural gas, or LNG — the natural gas that's used to heat homes and make electricity, loaded into ships for easier global trade. European natural gas markets have surged more than 20%.
After recent investments in LNG terminals, the U.S. is the world's largest exporter of LNG. Higher prices boost companies that send natural gas overseas, but contribute to rising electricity costs in the U.S.
NPR's Rafael Nam and Aya Batrawy contributed to this report.
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