Markets steady, crude oil prices ease on Tuesday after volatile start to week

The U.S. stock market and oil prices were holding steadier on Tuesday as Wall Street waits for the next signal on when the war with Iran may end.

The S&P 500 added 0.3 per cent, a day after its latest wild swings caused by extreme moves in the oil market. The Dow Jones Industrial Average was up 210 points, or 0.4 per cent, as of 12:30 p.m. ET, and the Nasdaq composite was 0.6 per cent higher.

Oil prices, meanwhile, were near where they were late Monday. Spikes there have been rocking financial markets worldwide because of worries that the war could block the global flow of oil and natural gas for a long time.

The price for a barrel of Brent crude, the international benchmark, was sitting at $89.42 US. That’s down 9.6 per cent from its settlement price the day before, but much of that decline happened before the end of Wall Street’s trading day on Monday. That’s why the drop did not give much of a boost to U.S. stocks on Tuesday.

A barrel of benchmark U.S. crude was also sitting close to where it was late Monday, at $84.64 US.

Oil prices plunged Monday afternoon from a high of nearly $120 US per barrel, its most expensive level since 2022, after U.S. President Donald Trump told CBS News that he thinks “the war is very complete, pretty much.”

That raised hopes that the war may end sooner than later, which could allow oil to flow freely again from the Middle East to customers around the world.

But Trump’s comments later Monday, after the U.S. stock market finished trading, were not as clear. And a spokesperson for Iran’s paramilitary Revolutionary Guard said that “Iran will determine when the war ends.”

Iran launched new attacks on Tuesday at Israel and Gulf Arab countries, keeping pressure on the Middle East in a war started by Israel and the United States 10 days ago that has sent oil prices surging.

WATCH | War in Middle East roils oil prices:

Oil prices see major volatility from war in Middle East

The ongoing uncertainty for the global oil supply because of the U.S.-Israel war with Iran caused a volatile day for markets on Monday, with oil prices skyrocketing in the morning only to tumble back down later in the day.

There is a great deal of uncertainty about just how high oil prices will go and how long they will stay there.

“The outlook for oil right now is about as binary as it gets,” said Hakan Kaya, a senior portfolio manager at Neuberger Berman.

“Either the Strait of Hormuz reopens and you see a massive unwind of the risk premium, or it stays shut and we are looking at the largest supply disruption in modern history. There is no middle ground, and that is why putting a number on it is almost irresponsible.”

WATCH | Strait of Hormuz a critical choke point:

Why the Strait of Hormuz closure raises the price at the pump

Almost 20 per cent of the world’s oil supply passes through the Strait of Hormuz, so with Iran forbidding any navigation through it, supply drops and the price for oil and petroleum products such as gas goes up for everyone, everywhere.

The International Energy Association said it will hold a meeting on Tuesday to discuss whether the 32 countries that are members should release some of their oil stockpiles to push downward on the price of oil.

If oil prices stay very high for very long, household budgets already stretched by high inflation could break under the pressure. Companies would see their own bills jump for fuel and to stock items on their store shelves or in their data warehouses.

Concerns have focused on the Strait of Hormuz, a narrow waterway off Iran’s coast that a fifth of the world’s oil sails through on a typical day. Iran has threatened to set fire to ships sailing the strait.