Dollar Rises as Middle East Tensions Push Oil to Multi-Year Highs

Yahoo Finance Singapore reported Monday that Middle East tensions have pushed Brent crude to roughly $114 a barrel. Equities retreated and the dollar strengthened as energy markets absorbed the latest escalation.

Wall Street Steps Back From Record Highs

The S&P 500 snapped its longest streak of weekly gains since 2024. Brent crude’s sharp move higher drove the session. Elevated oil prices amplified existing inflation concerns already weighing on investor sentiment. Treasury yields climbed alongside crude, reflecting worry that persistently high energy costs could reignite broader price pressures across the U.S. economy.

Analysts at Morgan Stanley‘s E*Trade unit, led by strategist Chris Larkin, noted that last week’s strong performance depended heavily on avoiding fresh negative surprises from the region. Earnings momentum had been carrying markets. That buffer is now being tested by geopolitical noise.

Also Read: Fed Holds Rates Steady as Inflation Path Stays Uncertain

Hormuz Strait Becomes the Crisis Flashpoint

The Strait of Hormuz has sat at the center of the conflict since U.S. and Israeli forces began strikes against Iran in late February. Traffic through the vital waterway has fallen to near zero. South Korea’s Yonhap news agency confirmed an explosion and subsequent fire aboard a vessel in the strait. The UAE’s emergency management authority separately said air defenses were responding to a missile threat.

A plan put forward by President Donald Trump to restore safe passage through Hormuz left shipping industry executives confused. Attacks have continued regardless, and commercial transits have not recovered. The U.S. also denied Iranian state media claims that American naval assets had been struck by missiles.

Also Read: Energy Stocks Rally as Crude Holds Above $100

Why the Aftershocks May Linger

Darrell Cronk at Wells Fargo Investment Institute warned that even a near-term de-escalation would not quickly erase the economic damage. Effects on energy pricing, industrial output, and embedded risk premiums are likely to persist, he noted.

On the earnings front, the picture remains constructive. Michael Wilson at Morgan Stanley highlighted that S&P 500 estimates have moved steadily higher over the past month. Second-quarter forecasts are up 2%. Full-year 2026 and 12-month forward estimates have risen 3% and 4% respectively. Matt Maley at Miller Tabak observed that equities have held up remarkably well given the crude spike and the rise in long-term yields. Markets appear to be pricing in an eventual resolution, though that assumption carries its own risks.

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