Oil rises 5% on Iran tensions as Wall Street stocks slip

The United States seized an Iranian cargo ship attempting to evade a blockade of Iranian ports on Monday, reigniting US-Iran military tensions and sending global oil prices higher. Brent crude, the international benchmark, rose 5.3% to $95.21 per barrel on concerns Iran might restrict the flow of oil from the Persian Gulf. Wall Street stocks declined modestly, with the S&P 500 down 0.3% by midday trading and the Nasdaq down 0.5%.

The measured market reaction reflects investor expectations that a deal between the United States and Iran could still bring an end to the conflict, which would restore oil flows from the Middle East to global customers. Both countries have economic incentives to conclude the war.

The seizure of the Iranian cargo ship follows a rapid reversal in geopolitical tensions. On Friday, stocks surged and oil prices collapsed after Iran announced it would reopen the Strait of Hormuz to commercial traffic. That optimism evaporated when Iran closed the strait again on Saturday, after the United States continued its blockade of Iranian ports.

Despite the recent volatility, oil prices remain well below the conflict’s peak. The S&P 500 likewise remains above where it stood before hostilities began.

Stock sector impacts

Companies with large fuel costs bore the brunt of Monday’s decline on Wall Street. Norwegian Cruise Line Holdings fell 4.4%, and Carnival fell 1.4%. United Airlines fell 2.6%, while American Airlines fell 4.7% after announcing it was not interested in a merger with United. The airline announcements reversed gains from the previous week when reports suggested United was seeking a combination with its rival.

TopBuild, a distributor of insulation and construction products, jumped 17.7% after QXO announced it would acquire TopBuild in a deal valued at approximately $17 billion. The deal would make QXO the second-largest publicly traded construction products distributor on the continent. QXO’s stock fell 5.8% following the announcement.

Strong earnings backdrop

A primary driver of Wall Street’s recent strength has been strong earnings from US companies in the first quarter of 2026. About 10% of S&P 500 companies have reported first-quarter results, with nearly 90% beating analyst expectations.

Morgan Stanley strategists led by Michael Wilson said that “despite geopolitical risks, the earnings recovery remains intact,” with analysts raising earnings expectations for spring 2026 even since the war began. Several major US banks that reported first-quarter earnings said they see the US economy remaining resilient, particularly given strong consumer spending.

Global markets

International stock markets showed mixed results. Germany’s DAX fell 1.2%, while Hong Kong’s Hang Seng rose 0.8%.