US stocks plummeted Thursday as oil prices hit $100 after Iran’s new supreme leader vowed to keep the Strait of Hormuz blocked.
The Dow Jones Industrial Average had plunged 590 points, or 1.25%, as of 11 a.m. ET Thursday while the S&P 500 and Nasdaq fell 1.25% and 1.7%, respectively.
Brent crude oil prices jumped to $100 a barrel overnight, while West Texas Intermediate crude hit roughly $93 – sending national average gasoline prices to $3.60, an increase of over 20% the past month, according to AAA.
Iran has vowed to attack any ship that dares to traverse the Strait of Hormuz, a vital maritime route for 20% of the world’s oil supply – and its new supreme leader on Thursday vowed to keep that blockade in place.
“Certainly, the lever of blocking the Strait of Hormuz should still be used,” Mojtaba Khamenei said in his first message to the public, following reports that he was in a coma and had his leg amputated after being severely injured in the US-Israeli strikes that killed his father and other family members.
Economists have warned that energy shocks tend to ripple across consumer prices, potentially reheating inflation as the labor market shows signs of weakening – creating the toxic mix of high prices and flat growth known as stagflation.
President Trump has argued that carrying out “Operation Epic Fury” in Iran is more important than the threat of higher oil and diesel prices – which could send prices higher not just at gas pumps, but at grocery stores, restaurants and retailers, too, according to experts.
“The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money,” Trump wrote in a Truth Social post Thursday morning.
“BUT, of far greater interest and importance to me, as President, is stoping [sic] an evil Empire, Iran, from having Nuclear Weapons, and destroying the Middle East and, indeed, the World. I won’t ever let that happen!”
Energy Secretary Chris Wright said Thursday that the US is not yet ready to escort oil tankers safely through the Strait of Hormuz – after earlier this week walking back a claim that the Navy had already done so.
“It’ll happen relatively soon but it can’t happen now,” Wright told CNBC during a Thursday interview.
“We’re simply not ready. All of our military assets right now are focused on destroying Iran’s offensive capabilities and the manufacturing industry that supplies their offensive capabilities.”
He said it is likely that the Navy will be in a position to escort tankers through the treacherous waterway by the end of this month.
On Tuesday afternoon, Wright abruptly deleted a social media post claiming the US had successfully escorted an oil tanker through the strait.
White House press secretary Karoline Leavitt later confirmed the post was inaccurate.
Iraq and Kuwait have already started shutting down production from some oil fields, and Iran has reportedly begun laying mines throughout the Strait of Hormuz – so oil prices could remain elevated even if the war ends soon, according to analysts.
