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US stocks fell sharply Thursday after oil prices surged to $100 a barrel, following statements from Iran’s new supreme leader vowing to keep the Strait of Hormuz blocked. The move raised concerns about energy costs and the risk of renewed inflation.
As of 11 a.m. ET Thursday, the Dow Jones Industrial Average was down 590 points, or 1.25%. The S&P 500 fell 1.25%, while the Nasdaq declined 1.7%.
Brent crude rose to $100 a barrel overnight, while West Texas Intermediate crude was around $93. AAA said national average gasoline prices reached $3.60, up more than 20% over the past month.
Iran’s new supreme leader said the “lever of blocking the Strait of Hormuz should still be used,” according to his first public message. He made the comments after reports that he was in a coma and had his leg amputated following injuries in US-Israeli strikes that killed his father and other family members.
Iran has vowed to attack any ship that attempts to traverse the Strait of Hormuz, a key maritime route accounting for 20% of the world’s oil supply.
Economists warned that energy shocks can spread into consumer prices, potentially reheating inflation as the labor market shows signs of weakening. They described the resulting combination of high prices and flat growth as “stagflation.”
President Trump argued that carrying out “Operation Epic Fury” in Iran is more important than the risk of higher oil and diesel prices, which could raise costs not only at gas pumps but also for groceries, restaurants, and retailers, according to experts. In a Truth Social post, he also said the US is the world’s largest oil producer and that higher oil prices benefit the country.
Energy Secretary Chris Wright said Thursday that the US is not yet ready to escort oil tankers safely through the Strait of Hormuz. He noted that the timing has changed after earlier claims were walked back.
“It’ll happen relatively soon but it can’t happen now,” Wright told CNBC.
“We’re simply not ready. All of our military assets right now are focused on destroying Iran’s offensive capabilities and the manufacturing industry that supplies their offensive capabilities.”
Iran has said it is likely the Navy will be able to escort tankers through the waterway by the end of the month. Separately, Wright deleted a social media post on Tuesday that claimed the US had already escorted an oil tanker through the strait, and White House press secretary Karoline Leavitt later said the post was inaccurate.
Analysts said Iraq and Kuwait have started shutting down production from some oil fields, and Iran has reportedly begun laying mines throughout the Strait of Hormuz. They warned that oil prices could remain elevated even if the war ends soon.
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