Oil prices surged to their highest levels since 2023 due to the Iran war, coinciding with a weak update on the US labour market that highlighted the economy's precarious position.
The S&P 500 dropped 1% after oil prices spiked above $90 per barrel. The Dow Jones Industrial Average was down 425 points, or 0.9%, with roughly an hour remaining in trading, and the Nasdaq composite was 1.1% lower.
The price for a barrel of Brent crude, the international standard, shot up another 8.5% to settle at $92.69. It briefly rose above $94 to touch its highest level since September 2023. A barrel of benchmark U.S. crude jumped 12.2% to $90.90 and topped $90 per barrel for the first time since the autumn of 2023.
The combination of soaring oil prices and a negative US payrolls report has intensified investor concerns about the risk of stagflation, where a stagnating economy meets high inflation.
The Federal Reserve faces a challenging situation, as rising oil prices complicate its ability to cut interest rates to stimulate the economy without further fuelling inflation.
