Oil rises back toward $100 and stocks tumble after a new wave of tanker attacks shakes markets

• Oil was hovering near $100 on Thursday after Iran stepped up attacks on tankers.
• The latest tensions have overshadowed the IEA's historic release of oil reserves.
• Stocks dropped on Thursday as oil's new spike exacerbated inflation fears.

Oil briefly broke past the $100-per-barrel mark on Thursday, sending stocks tumbling as traders fretted over the economic impacts of the Iran war.

Brent crude surged to nearly $102 a barrel before dipping back down to around $99. West Texas Intermediate crude was trading around $94 a barrel after reaching almost $96 earlier in the day. The recent spike in prices reflects fears of prolonged supply disruptions and continued uncertainty over how the conflict between Iran and the US and Israel will play out.

Brent crude has surged 43% in the past month alone, while WTI has soared 46%. The two benchmarks were trading around $60 a barrel at the start of this year.

The spike on Thursday sent stocks tumbling.

Here's where major indexes stood around 10 a.m. ET:

S&P 500: 6,701.80, down 1%

Dow Jones Industrial Average: 46,843.60, down 1.21% (573.67 points)

Nasdaq Composite: 22,410.023, down 1.35%

The latest gains in oil came despite the International Energy Agency saying on Wednesday that it would release 400 million barrels from strategic reserves to address disruptions stemming from the Iran conflict — the largest coordinated release in the agency's history.

Iran's latest attacks against tankers appear to be a "direct and forceful Iranian response to the IEA's overnight announcement of a massive strategic reserve release aimed at cooling runaway prices," wrote Tony Sycamore, a market analyst at IG, on X.

Earlier on Wednesday, three cargo ships in the Persian Gulf and a dry bulk vessel sailing through the Strait of Hormuz were hit. The Strait is a critical waterway that handles about 20% of the world's oil shipments.

Iran warned of even higher oil prices as it remains defiant.

"Get ready for oil to be $200 a barrel, because the oil price depends on regional security, which you have destabilised," Ebrahim Zolfaqari, a spokesperson for Iran's military command, said in comments addressed to Washington, according to Reuters.

The latest escalation injects fresh uncertainty into global energy markets, as analysts were already questioning how much the IEA's move would actually help stabilize prices if disruptions continue, and how long it will take to bring the reserves to market.

"The only way to see oil prices trade lower on a sustained basis is by getting oil flowing through the Strait of Hormuz. Failing to do so means that the market highs are still ahead of us," wrote ING commodity strategists in a Wednesday note.

Prices breached the $100-a-barrel level and neared $120 on Sunday. Historically, when crude approaches those levels, demand begins to soften as elevated fuel costs drag on broader economic activity, wrote Ole Hansen, the head of commodity strategy at Saxo Bank, on Tuesday.

"Sustained prices at these levels carry an increased economic risk, at a time where global economic activity already remains challenged by geopolitical shifts and tariff-related obstructions to trade," Hansen added.

Bob Elliott, the former head of Ray Dalio's research team at Bridgewater Associates, wrote in a Substack post on Thursday that the economic fallout from an oil shock of this magnitude is "not pretty."

He warned that higher inflation and lower consumer spending in the US could imperil growth forecasts.

"Absent a very swift reversal of the conflict impacts, it's hard to see how we can get anything close to the 2-3% real growth still expected by the consensus for '26," he wrote.