US stock futures tumbled but were trimming losses on Monday on hopes for an easing in the oil supply squeeze, after crude prices surged past the $100-a-barrel mark amid fears of a prolonged Middle East conflict.
Dow Jones Industrial Average futures (YM=F) were down 1.2% after plunging more than 1,000 points overnight. Contracts on the S&P 500 (ES=F) and the Nasdaq 100 (NQ=F) sank 1% and 1.1%, respectively. All three indexes had tanked more than 2% in earlier out-of-hours trading.
Oil prices were coming off earlier highs after spiking around 25% late Sunday to top $119 a barrel, reaching levels not seen since 2022. The spike came as conflict in Iran spurred crude-producing countries to cut output, already curbed by the virtual closure of the Strait of Hormuz shipping corridor. Kuwait confirmed unspecified production cuts, while Iraqi output is reported to have plunged about 70%.
Amid the supply crunch, ministers from the G7 top economies will meet on Monday to discuss a possible joint release of petroleum from IEA reserves, per media reports. The US and two other countries are said to back the move, which appears to have soothed nerves rattled on Sunday by Trump suggesting high costs were “a very small price to pay” for security.
West Texas Intermediate (CL=F) crude futures were trading at around $103 a barrel, while global benchmark Brent (BZ=F) futures changed hands above $107. Both were about 15% higher.
The sell-off in stocks followed a bruising stretch last week, which saw the Dow (^DJI) lose roughly 3%, marking its steepest weekly drop since tariff concerns from the Trump administration rattled markets in April 2025. The S&P 500 (^GSPC) slid about 2%, while the Nasdaq Composite (^IXIC) finished down over 1%.
Looking to domestic economic reports, investors will be watching closely for Wednesday’s Consumer Price Index and Friday’s Personal Consumption Expenditures index readings, though both won’t capture the effect of oil’s dramatic recent surge on price pressures just yet.
On the corporate front, earnings season continues with results from Hewlett Packard Enterprise (HPE) expected after Monday’s closing bell. Reports from Oracle (ORCL), Adobe (ADBE), and Dick’s Sporting Goods (DKS) are scheduled in the week ahead.
LIVE 9 updates
-
Global bond rout grows as oil jump upends interest-rate outlook
Bloomberg reports:
Global bond markets fell on Monday as an oil price shock prompted investors to price in higher inflation and a deteriorating economic growth outlook.
Yields on benchmark 10-year US Treasuries (^TNX) rose more than three basis points to 4.17%, while the rate on policy-sensitive two-year notes jumped four basis points. Traders scaled back expectations for the Federal Reserve’s next quarter-point rate cut to September. Before the Middle East war erupted, traders had fully priced in a move by July. Bond options show some traders betting the Fed may not cut rates at all this year.
The moves were more aggressive in Europe and the UK: swaps imply a 60% chance of the European Central Bank hiking rates twice this year and slightly less than a 50% probability of the Bank of England raising borrowing costs once by the end of the year. German two-year yields surged nine basis points to 2.40% and their UK equivalents soared as much as 30 basis points to 4.17%, the biggest increase since October 2022.
Read more here.
-
Europe’s blue chips head for correction as oil soars
From Bloomberg:
European blue-chip stocks fell and were set for a correction as intensifying conflict in the Middle East sent oil soaring past $100 a barrel, reigniting fears that inflation could curb economic growth.
The Euro Stoxx 50 (^STOXX50E) Index fell as much as 3.1% to trade at 584.56 as of 8:47 a.m. in London, nearing a 10% drop since its peak in February as the war in Iran weighed on shares. The broader Stoxx Europe 600 (^STOXX) Index retreated 2.4%.
Among sectors, miners, banks, retail, construction as well as travel and leisure stocks led the losses. Airlines shares declined, with Lufthansa AG dropping 4.9%. LVMH was down 2.0% as luxury stocks came under pressure amid concerns about weakening consumer demand. The energy sector outperformed, with oil majors like Shell Plc and BP Plc up 2.1% and 1.3%, respectively.
Europe’s main equities benchmark, the Stoxx Europe 600, posted its biggest weekly drop since April last week. The conflict in the Middle East — entering its 10th day — showed little sign of abating after Iran named the son of the late Ayatollah Ali Khamenei as its new supreme leader and military strikes continued.
Read more here.
-
Stagflation trades sweep markets as Trump signals widening war
Optimism for a quick resolution of the conflict in the Middle East is rapidly ebbing in financial markets.
Bloomberg reports:
Read more here.
-
G7 to discuss joint release of emergency oil reserves
The Financial Times reports:
G7 finance ministers will discuss a possible joint release of petroleum from reserves co-ordinated by the International Energy Agency, in an emergency meeting on Monday aimed at tackling the surge in oil prices following the conflict in the Gulf.
The ministers and Fatih Birol, IEA executive director, will hold a call at 8.30am New York time to discuss the impact of the Iran war, according to people familiar with the situation, including a senior G7 official.
Three G7 countries, including the US, have so far expressed support for the idea, according to the people familiar with the talks.
The 32 members of the IEA hold strategic reserves as part of a collective emergency system designed for oil price crises. One person said some US officials believe a joint release in the range of 300mn-400mn barrels — 25 to 30 per cent of the 1.2bn barrels in the reserve — would be appropriate.
Read more here (premium subscribers)
-
How some on Wall Street are thinking
Veteran strategist Chris Rupkey has this solid new hot take on the oil surge below.
I would say his view is still far from the consensus (we go into a recession because of the Iran situation), But we should be on the lookout for commentary like this in the next few days:
-
Goldman weighs in on oil surge
Goldman Sachs’ new call on oil already looks outdated, given the outsized move in prices we have seen since last night.
-
Asian gauges hammered as soaring oil price shakes global markets
Major gauges across Asia fell upwards of 5% as the US-Israeli war with Iran was seen to cause global instability. The drops have been driven by surging oil prices, a potential indicator of an incoming recession, accro
AP Finance reports:
Read more here.
-
Gold falls against backdrop of instability from oil spike
Bloomberg reports:
Read more here.
-
Oil pushes past $100 a barrel in fastest rally since 1980s
Yahoo Finance’s Jake Conley reports:
Read more here.
