US Stock Futures Slide as Iran–US Tensions Drive Oil Price Spike

Equity Markets Under Pressure Amid War Threats

US equity futures pointed to further declines to start the week. Dow Jones Industrial Average futures dropped roughly 0.8%, S&P 500 futures fell 0.7%, and Nasdaq 100 contracts led losses, down 1%. Stocks were on track to extend a “brutal” sell-off as the Middle East conflict entered its fourth week on the brink of a major escalation.

Risks intensified over the weekend as rhetoric between Washington and Tehran escalated. President Donald Trump said he did not want a ceasefire before giving Iran an ultimatum on Saturday, stating that if the Strait of Hormuz remained closed after 48 hours, he would order attacks on Iranian energy infrastructure. On Monday, Tehran launched fresh attacks after previously promising retaliation.

Oil, Inflation Fears, and Fed Outlook

Oil prices climbed sharply as the conflict and disruptions in the Strait of Hormuz fueled supply concerns. West Texas Intermediate crude futures jumped to touch $100 a barrel before easing somewhat, while global benchmark Brent crude futures surged to top $113. Goldman Sachs Group Inc. raised its 2026 oil price forecasts due to the prolonged disruption of flows through the Strait of Hormuz, describing the situation as the largest-ever supply shock for the global crude market. The bank now expects Brent to average $85 a barrel in 2026, up from an earlier forecast of $77.

Higher oil prices have heightened worries about inflation and the Federal Reserve’s policy path. Gold futures erased their 2026 gains amid concerns that rising inflationary pressure could prompt Fed policymakers to hold off from cutting interest rates this year.

The growing specter of stagflation linked to the Iran war has weighed heavily on fixed income markets. More than $2.5 trillion has been wiped from the value of global bonds in March, putting them on track for the biggest monthly loss in more than three years. International Energy Agency Executive Director Fatih Birol said the effect of current disruptions was equivalent to the two major oil crises in the 1970s and the 2022 natural gas crisis after Russia invaded Ukraine, “all put together.”

FAQ

What is happening to US stock futures?
US stock futures are declining, with Dow Jones Industrial Average futures down about 0.8%, S&P 500 futures down 0.7%, and Nasdaq 100 futures down 1%, extending an ongoing sell-off.

Why are oil prices rising?
Oil prices are rising due to escalating conflict involving Iran and the United States and disruptions to flows through the Strait of Hormuz, which have created what Goldman Sachs calls the largest-ever supply shock for the global crude market.

How is this affecting inflation and Federal Reserve expectations?
The surge in oil prices is increasing concerns about higher inflation, and worries that such pressures could lead Federal Reserve policymakers to delay interest rate cuts this year.

What is the impact on global bonds?
The fear of stagflation linked to the Iran conflict has erased more than $2.5 trillion from the value of global bonds in March, putting them on course for their largest monthly loss in more than three years.