The Dow tumbled more than 1,000 points on Tuesday after gasoline prices spiked overnight and oil rocketed above $83 a barrel as the widening conflict in Iran began to disrupt global energy supplies.
The Dow Jones Industrial Average plunged 1,050 points, or 2.01%, while the S&P 500 fell 1.80%, or 138 points, and the Nasdaq Composite dropped more than 450 points, or 1.96% as investors dumped stocks amid surging oil prices and escalating tensions tied to the Iran conflict.
Oil prices surged as traders priced in the risk of major supply disruptions after Iran ordered the closure of the Strait of Hormuz, with Brent crude climbing roughly 7% to top $83 a barrel and West Texas Intermediate jumping a similar percentage to around $77.
According to AAA, the national average price for regular gasoline climbed to $3.11 per gallon, up from $3 a day earlier — a jump of roughly 11 cents overnight.
The price is also higher than a week ago, when drivers were paying $2.98, though still below the $3.58 average recorded a year ago.
The Iran conflict has dramatically escalated in the past several days, with Tehran declaring that the Strait of Hormuz is closed and warning it will attack any vessel attempting to transit the narrow waterway that carries about 20% of the world’s oil supply.
Iran’s Revolutionary Guards have issued the most explicit threats yet to commercial and military shipping, while US CENTCOM says the strait remains legally open but shipping risk levels have spiked to “critical,” prompting insurers to cancel war-risk cover and forcing many vessels to anchor or reroute.
The conflict’s violence has spread beyond Gulf chokepoints as Iranian forces launched strikes on US diplomatic facilities and missile attacks in the region, and at least three tankers have been damaged with reported casualties as shipping traffic grinds to a near halt.
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