Brent crude futures settled at $100.46 a barrel on Thursday, the first close above the psychologically significant $100 threshold since August 2022, after Iran's new Supreme Leader vowed to keep the Strait of Hormuz closed and Iranian-linked vessels struck two fuel tankers in Iraqi waters. Global equities fell broadly, with the MSCI All-World index and the S&P 500 each dropping 1.5%, as energy markets repriced a conflict with no clear timeline for resolution.
U.S. West Texas Intermediate rose in parallel, gaining 9.7% to close at $95.70 a barrel. During the session, Brent briefly touched $101.60, a level that prompted fresh discussion among market participants about the trajectory toward the $115 range where stagflation risks become more acute for import-dependent economies. The International Energy Agency responded by announcing a record emergency reserve release of 400 million barrels from member-state stockpiles — a supply buffer that analysts broadly view as a short-term stabilizer rather than a structural fix.
The Hormuz Closure: Scale and Implications
Approximately one-fifth of the world's oil supply passes through the Strait of Hormuz on a normal trading day. Since the current conflict began, at least 16 ships have been struck in the region. On Thursday, Iraqi security officials confirmed that two fuel tankers in Iraqi waters were hit by explosive-laden Iranian boats, and an Iraqi official told state media that its oil export ports had "completely stopped operations." The combined effect — a near-total halt to Gulf export activity and rising insurance costs on regional shipping lanes — is what has driven the current energy price spike.
Iran's new Supreme Leader Ayatollah Mojtaba Khamenei, in his first public statement since succeeding his slain father, confirmed that Iran would continue attacks on Gulf Arab neighbors and maintain the effective closure of the strait as leverage against the United States and Israel. The statement eliminated near-term hopes of de-escalation that had briefly steadied markets on Tuesday and Wednesday. For background on the diplomatic dynamics shaping Iran's posture, Foreign Diplomacy reports on how India's oil waiver and China's sanctions warnings have shaped the conflict's two-track economic pressure campaign.
U.S. Energy Secretary Chris Wright told reporters Thursday that global prices reaching $200 a barrel was "unlikely," in part because of coordinated reserve releases and the U.S.'s own status as a net energy exporter. Analysts at several major institutions note, however, that if the strait remains closed for a sustained period — measured in weeks rather than days — prices could still climb to $150 a barrel, based on historical supply-shock models from the 1973 and 1979 episodes.
Equities and Bonds: Inflation Risk Overrides Safe-Haven Demand
The equity damage on Thursday was broad-based. The Dow Jones Industrial Average fell 739 points, or 1.6%, while the Nasdaq Composite dropped 1.8%, reflecting particular sensitivity in technology names to rising real borrowing costs. Europe's STOXX 600 slipped 0.6%, a comparatively contained move given that European economies are more directly exposed to energy price shocks as net oil importers. Tracking overall international exposure, the MSCI All-World index closed down 1.5%.
Bond markets offered an unusual signal. Typically, global equity selloffs drive capital into sovereign debt, compressing yields. On Thursday, the reverse occurred: the 10-year U.S. Treasury yield climbed 5.5 basis points to 4.261%, while 2-year Treasury yields hit a six-month high. The pattern reflects a market pricing in the inflation implications of sustained high energy costs rather than seeking the safety of fixed-income duration. Monica Guerra, head of U.S. policy at Morgan Stanley Wealth Management, put the dynamic plainly:
If higher oil prices persist, the Fed's reaction function could be complicated, supporting a higher fed funds rate for longer.
— Monica Guerra, Morgan Stanley Wealth Management, March 12, 2026
Compounding equity pressure was renewed stress in the private credit market. Morgan Stanley fell 4% after gating one of its private credit funds, following similar actions earlier this month by Blackstone, which fell 4.7%, and BlackRock, down 2.9%. The $2 trillion private credit market — which has expanded rapidly in the low-rate era — faces liquidity questions as rate expectations shift higher.
For broader context on how the conflict is reshaping U.S. domestic market dynamics, US Market Updates tracked Wednesday's 289-point Dow decline and the inflation pressures preceding Thursday's escalation.
Currency Markets: Dollar Gains as Energy Importers Feel the Pinch
The U.S. dollar strengthened across most major pairs on Thursday, supported by two distinct forces: its traditional safe-haven status in risk-off environments, and the structural advantage the United States holds as a net energy exporter. The dollar index (DXY) gained more than 1.5% against a basket of major currencies, approaching its highest level since November 2025.
The euro slipped 0.45% to 1.1515 against the dollar, reflecting both energy import exposure and a flight from European assets amid concerns that protracted high energy prices could tip the eurozone back into stagflation territory. The Japanese yen, carrying similar exposure as a major energy-importing economy, weakened to 159.36 per dollar. Gold fell 1.7% to $5,088 an ounce — a counterintuitive move that reflects the same dynamic at work in bond markets: the dollar's relative strength and the anticipation of higher rates suppressed demand for the non-yielding safe haven.
The February U.S. Consumer Price Index, released Wednesday, showed a 0.3% month-on-month increase — above January's 0.2% reading and slightly above consensus — but the data was largely set aside as a backward-looking indicator. What concerns markets now is the forward trajectory: energy prices feed into headline inflation with a lag of roughly four to six weeks, meaning the February CPI does not yet reflect the oil move underway since early March.
Outlook: What to Watch
The central variable for global markets remains the Strait of Hormuz. Iran's Thursday statement removed the scenario of quick diplomatic resolution from near-term probability. The IEA's record 400-million-barrel release buys time — perhaps four to eight weeks of supply smoothing — but does not alter the structural calculus if Iranian-controlled waterway restrictions persist.
On the monetary policy side, a Reuters poll of economists published Thursday projects the Federal Reserve's first interest rate cut of 2026 will come in June. Crucially, nearly 40% of respondents now expect just one cut or none at all for the full year — almost double the share that held that view in January, before the current oil shock. The European Central Bank faces a more difficult calibration: it must weigh weakening growth signals against energy-driven inflation that limits the space for rate reductions.
Traders and analysts will monitor four specific developments in the sessions ahead: whether Iraqi oil export ports resume operations, the pace of IEA reserve drawdown and member-state compliance, any signals from U.S. military commands in the region regarding operational posture, and OPEC+ emergency consultations that may determine whether the cartel adjusts production guidance in response to the supply shock. The U.S. Foreign Policy desk examines how Iran's leadership succession is reshaping Washington's strategic calculus in the Gulf, a dynamic with direct implications for how long the current standoff continues.
