Stock futures fell and energy prices soared on Tuesday as concerns spread that the Iran war could bring prolonged disruption to global markets.
The response came as President Donald Trump indicated the US-Israeli operation could last for weeks. Iran’s retaliatory strikes across the Middle East have hit US embassies and Gulf oil facilities and nearly halted shipping through the Strait of Hormuz, a key waterway for global energy supplies.
The conflict has caused massive travel disruptions, with tens of thousands of people and air cargo stranded in popular destinations such as Dubai, which has been targeted in Tehran’s strike.
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Futures, which indicate where the S&P 500 trades at the opening bell, fell 2%, while Dow futures indicated a 970-point drop. Nasdaq 100 futures, which track the more tech-focused index, slid 2.3%.
Meanwhile, energy prices soared after posting a big jump on Monday.
US crude traded 7.5% higher, bringing its total increase since Sunday night to more than 13% and pushing prices to their highest since January 2025.
The international crude oil benchmark jumped 8% to its highest level since July 2024.
The soaring price of crude oil has also pushed up retail gasoline prices. Early Tuesday, the average price of U.S. gas jumped 14 cents from last week to $3.077 a gallon.
By the end of the week, GasBuddy analyst Patrick de Haan predicts “we’ll be closer to $3.10-$3.20/gal.”
Natural gas prices continued their rise, jumping more than 4% Tuesday morning. Natural gas futures traded in Europe rose a stunning 40% after Qatar Energy said it would halt production of liquefied natural gas on Monday and halted production of several other energy products on Tuesday.
Markets around the world also reacted negatively.
In Italy, the benchmark FTSE MIB index fell 4%. Germany’s DAX stock index fell 3.6%, while stocks in major indexes in France and the United Kingdom fell 2.7%.
The Stoxx 600, Europe’s answer to the S&P 500, fell nearly 3%. In Asia, Korea’s Kospi averaged 7% and Japan’s Nikkei 225 fell 3%. Shares in China, Hong Kong and India also fell more than 1%.
“The negative risk tone reflects the sense that missile and drone attacks are intensifying and spreading through the Middle East as Iran struck the US embassy in Riyadh and Israel has targeted Hezbollah in Lebanon,” analysts at Lloyds Bank said on Tuesday.
“Trump’s skepticism about the potential duration of the war and lingering questions about the exact intent will not help dampen market uncertainty,” he added.
US markets ended Monday on a relatively muted note. However, additional overnight strikes and fresh comments from Trump appeared to raise alarm among traders, who pulled out of more volatile assets such as stocks and bonds.
“The focus will now be on whether Iran can step up its attacks on the production facilities of the region’s major marginal energy supplier,” analysts at ING wrote in a research note on Tuesday.
