Brent crude stock market pressure builds as oil tops $100

The brent crude stock market link came back into focus Thursday as U.S. equities fell after Brent futures rose above $100 a barrel. CNBC reported that the move followed a 12th consecutive night of U.S. strikes against Iran and reports of tanker attacks off Saudi Arabia, adding pressure to energy prices, Treasury yields and risk assets.

The S&P 500 was down 1.24% at 7,406.31 around midday, according to CNBC market data, and was on course for its sharpest decline in about a month. The 10-year Treasury yield moved above 4.7%, its highest level since January 2025, while 30-year yields were above 5%.

Brent’s move above $100 intensified concerns that a longer conflict in the Middle East could feed through to inflation and borrowing costs. West Texas Intermediate crude futures rose 6% to $92 a barrel, according to CNBC, leaving the U.S. benchmark more than 28% above lows below $70 reached earlier in July.

Why are oil prices weighing on stocks?

Higher oil prices can lift fuel and transport costs across the economy, which may slow consumer spending and keep inflation elevated. If inflation pressure persists, investors may expect the Federal Reserve to hold rates higher or raise them, increasing financing costs for companies and reducing the present value investors place on future earnings.

Steve Sosnick, chief strategist at Interactive Brokers, told CNBC the market was no longer looking past the combined rise in crude and yields. “These problems became too big to ignore,” Sosnick said, adding that $100 oil, 10-year yields above 4.70% and 30-year yields above 5% were difficult for equities to discount.

Reuters reported that the U.S. military had completed a 12th straight night of strikes against Iran. CNBC also cited reports of attacks on tankers off the coast of Saudi Arabia, a development that helped push crude prices higher by raising concern about supply and shipping risk in a region central to global energy flows.

The S&P 500 is now down about 2% since the run of nightly U.S. strikes began on July 12, according to CNBC. Earlier in the year, after the U.S.-Iran war began in March, the index fell more than 7.5% at its low point while oil surged nearly 70%, as investors assessed the risk of stagflation, a mix of higher inflation and weaker growth.

Stocks later recovered sharply in April and May after de-escalation announcements between Washington and Tehran and renewed investor interest in artificial intelligence-linked shares, CNBC reported. JPMorgan equity strategists wrote earlier in July that they had argued since the second half of March for buying equity weakness tied to the Iran conflict, because they believed an off-ramp and eventual deal were likely. They also said renewed flare-ups remained a risk.

Sameer Samana, senior global market strategist at Wells Fargo Investment Institute, told CNBC that traders should reconsider the economic concerns that surfaced in March. She said investors should be alert to both higher inflation and the strain higher gasoline prices may place on consumers, and described the renewed conflict as a reason to prepare for a larger equity drawdown.

Rate expectations also shifted. CNBC cited CME’s FedWatch tool showing the market-implied probability of a Federal Reserve rate increase next week at almost 38%, while the probability of a September increase was above 80%. A week earlier, those probabilities were about 12% and 53%, respectively.

Michael Tanney, chief executive of Pereon Wealth, told CNBC that he viewed the near-term oil move as more important for headlines than for client portfolios. He said a sustained move above $120 a barrel would be the point at which “serious trickle down effects” would become visible.

This story draws on original reporting from CNBC.