Oil rallies while equities slide amid Iran supply shock

Updated by Eric Kikomeko at 1315 EAT on Monday 2 March 2026

Oil futures surged in early trading after the United States and Israel launched strikes on Iran over the weekend.

US crude rose as much as 8% to around $72 on Sunday evening before easing to about $71. Brent crude, the international benchmark, initially jumped more than 12% to roughly $82 a barrel but later fell below $78. It had settled at just over $73 a barrel on Friday.

Meanwhile, stock futures declined. Futures for the S&P 500, Nasdaq Composite and Dow Jones Industrial Average were each down about 1%.

By contrast, futures for energy majors including ExxonMobil and Chevron rose about 2% apiece. Defence stocks such as Northrop Grumman and Lockheed Martin posted modest gains.

The initial surge in oil futures though sharp by typical crude market standards had largely been anticipated and remained within analysts’ expected range for a market that is rattled but not overly alarmed. Prices had already been trending higher in the run-up to a potential strike on Iran.

Traders are betting that the current disruption to oil markets will be relatively short-lived. However, significant uncertainty remains over the scope and duration of the conflict, which Donald Trump suggested could last weeks.
Industry analysts warn that large-scale unrest, a chaotic power vacuum, direct hits on oil production, or a prolonged shutdown of a key shipping chokepoint could eventually push crude prices to $100 a barrel or higher.

If that scenario materialises and markets are currently betting against it gasoline prices could surge sharply, potentially worsening affordability pressures for American consumers.

Iran plays a pivotal role in the global oil market. It is a major crude producer, sits alongside the strategic Strait of Hormuz a vital artery for global oil flows and exports significant volumes to energy-hungry economies such as China.
The country also holds the world’s third-largest proven oil reserves, according to OPEC.

The OPEC and its allies said early Sunday they would increase collective output by 206,000 barrels per day, resuming gradual production hikes that had been paused earlier this year.

In the fourth quarter, the group had raised production by 137,000 barrels per day.

The output increase may have helped cushion the immediate spike in oil prices, but energy analysts say the additional barrels are unlikely to materially restrain the market if tensions escalate.

The Strait of Hormuz, a narrow waterway off Iran’s southern coast, serves as the main export route for crude from leading producers including Saudi Arabia and Kuwait to global markets. Iran controls the strait’s northern flank.

Roughly 20 million barrels of oil — about one-fifth of global daily supply — transit the channel each day, according to the US Energy Information Administration, which classifies it as a “critical oil chokepoint.”

Iran has previously threatened to close the strategically vital Strait of Hormuz during periods of confrontation with the United States and other Western powers.
During Iran’s 12-day conflict with Israel last year, analysts at Goldman Sachs warned that oil prices could surge past $100 a barrel in a worst-case scenario involving an extended disruption to the strait.

Shutting the Strait of Hormuz would spark a severe energy crisis, according to Bob McNally, president of Rapidan Energy Group, speaking to CNN.

He added that an even more serious threat would be a sustained disruption to Saudi Arabia’s oil infrastructure. McNally pointed to the 2019 attack on the Abqaiq processing facility, noting that the site depends on highly specialised equipment that “you can’t just order from General Electric.”

Source: CNN

Invest or Donate towards HICGI New Agency Global Media Establishment – Watch video here