Travel stocks plummeted as fuel costs rose, with United Airlines down 3%, while energy stocks rose.
Global markets fell and oil prices rose after US President Donald Trump slammed Iran, saying the memorandum of understanding it signed with Iran to end the conflict was “done” and warning that it would likely carry out additional attacks on Wednesday night after the previous day’s attack.
On Wall Street, all major indexes started the day lower following the president’s remarks. The Dow fell 0.8%, the tech-heavy Nasdaq fell 0.2% and the S&P 500 fell 0.5%.
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Brent crude oil, the international benchmark, rose 4.2% to $77.24 a barrel, its highest level in two weeks.
“We’re going to hit them hard tonight,” Trump told reporters at the NATO summit in Turkiye, ahead of a meeting with Ukrainian President Volodymyr Zelensky, adding: “It could be a major attack.”
Oil prices have fallen in recent weeks, down from a high of $126 a barrel in late April, as a mid-June deal approaches to end the war and allow energy resources to flow through the crucial Strait of Hormuz, through which about a fifth of the world’s oil passes.
Immediately after the June deal, President Trump promised that gas prices for U.S. consumers would “fall like a rock,” and prices have indeed begun to fall. According to the American Automobile Association (AAA), which tracks daily gas prices, prices peaked at $4.48 per gallon ($1.18 per liter) in May and have now reached $3.79 per gallon ($1.00 per liter). Analysts say lower fuel prices are at risk, although they remain well above the $2.98 per gallon ($0.78 per liter) level on February 28, when the United States and Israel first attacked Iran.
“The US-Iran peace deal is a key risk for the second half of the year, determining whether the global economy enjoys the tailwinds of energy-led disinflation or absorbs a second oil shock,” Ryan Sweet, chief global economist at Oxford Economics, said in comments provided to Al Jazeera.
“Every time we attack Iran, oil goes up a little bit,” Trump told reporters.
But Trump also emphasized that the U.S. is increasing oil production in the state.
“We produce more oil than Russia and Saudi Arabia combined,” President Trump told reporters.
U.S. Treasury Secretary Scott Bessent echoed his comments Wednesday, saying he believes U.S. oil should potentially trade at a premium to the rest of the world.
At the NATO summit, President Trump was asked if the memorandum of understanding to end the war had been completed, and he said he thought so, saying, “I don’t want to have anything to do with them.”
His comments follow a statement by Iran’s Revolutionary Guards, which targeted U.S. military facilities in Bahrain and Kuwait in response to a wave of U.S. military attacks across Iran following the tanker attack in the Strait of Hormuz. The United States also revoked permits that had allowed Iran to sell oil.
“If the recent escalation leads to attacks on Iranian infrastructure or new uncertainties over regional stability, the changing tides in the oil sector risk a complete reversal to the March-April peak,” Ian Lingen, head of U.S. rates strategy at BMO Capital Markets, told Reuters.
Travel stocks have been hit by the looming rise in fuel prices. United Airlines fell 3%, Southwest Airlines fell 2% and Delta Air Lines fell 2.4%.
On the other hand, energy stocks also rose as oil prices soared. ConocoPhillips rose 1.8%. Chevron was not far behind, rising 1.5%, followed by ExxonMobil, up 1.4%.
Gold prices also fell. Spot gold fell 0.8% to $4,072.69 an ounce after hitting its lowest since July 2 in early trading. U.S. gold futures for August delivery fell 1.8% to $4,083.20 an ounce.
