Oil Settles Above $90 Again After First US Strike in a Month

Brent crude closed above $90 on Monday and Wall Street slid after a US strike on Iranian rocket launchers in the Strait of Hormuz ended a month of quiet.

American forces struck Iranian rocket launchers on the Strait of Hormuz on Sunday, the first US military action in the six-month war in a month, and oil rallied while stocks fell on Monday. Brent crude, the international standard, rose 2.7% to settle at $90.49 per barrel, while the S&P 500 fell 0.5%, the Dow dropped 331 points, and the Nasdaq lost 0.4% in afternoon trading, per AP business writers Damian Troise and Alex Vega. Losses were broad, with nearly every S&P 500 sector in the red.

The strike broke a lull that had let traders price the war premium out of crude. 'The Middle East had finally gone quiet enough for oil traders to start sanding some of the war premium out of crude,' wrote Stephen Innes of SPI Asset Management, in remarks carried by ABC News. 'Then Sunday arrived, with a reminder that quiet in the Strait of Hormuz is not the same as peace.' ABC News also reports US futures fell Monday, with S&P 500 and Dow futures each down 0.2% and Nasdaq futures off 0.1% before the open, as Brent initially jumped 3.4% to $91.10.

The Strait of Hormuz accounts for roughly 20% of the world's oil shipments, and the war has curtailed traffic through it, AP reports. Brent swung between $72 and $102 last month as hopes rose and fell for a deal to end the fighting, and it now sits back above $90. AP also notes that the national average for gasoline has been above $4 per gallon every day of August for the first time ever, according to AAA, making it the most expensive August at the pump on record and outpacing even the pandemic supply crunch of 2022. Meanwhile, the UAE said it intercepted an Iranian drone over its waters on Monday, signaling continued escalation risk.

Energy stocks gained as crude climbed, with Exxon Mobil up 2.1% and Chevron up 1.5%, AP reports. The steepest declines came from utilities: Edison International slumped 23.4% and PG&E fell 19.5% following reports about potential California wildfire legislation that would allow insurers to sue utilities over related claims. Amazon fell 2.9% after The Wall Street Journal reported that the Federal Trade Commission and more than 20 states are preparing to sue the retailer over claims it manipulated prices on its platform. GameStop rose on a preliminary second-quarter outlook above year-ago results, while Aon slid 8.6% on its $17 billion acquisition of USI Insurance Services from KKR.

Higher energy prices have fueled inflation that remains well above 3%, far beyond the Fed's 2% target, and complicated the central bank's rate path. Fed Chair Kevin Warsh said Friday that inflation is still too high and suggested a rate hike might be necessary in coming months, AP reports. The Fed receives its next inflation update on Sept. 11, days before its next policy meeting, and Wall Street is forecasting a 66% chance of a benchmark-rate hike there, according to CME FedWatch. The two-year Treasury yield rose to 4.35%, up sharply from about 3.50% at the start of 2026, and the 10-year climbed to 4.76% — near the level from two weeks ago when the Trump administration announced it would intervene in the bond market, per AP.

Markets now face a heavy week of economic data on top of geopolitical risk. The US reports August jobs data later this week, and the backdrop is fragile: AP reports that in July the job market stalled unexpectedly as employers cut 23,000 jobs, and Labor Department revisions slashed another 103,000 jobs from May and June payrolls. The Pentagon's next moves and any Iranian retaliation will steer oil, which traders will watch for whether Brent holds above $90 or the month's $72-$102 swing range reasserts itself. Still, despite Monday's slide, all three major indexes were on pace to close out August with a monthly gain after the S&P 500 and Nasdaq lost ground in July and June, AP notes.