The S&P 500 (SPX) is set to open the Friday trading session down by about 1% while crude oil futures are up by over 8% following Israel’s strikes on Iran. The Middle East is a major global producer of oil and any risk of rising geopolitical tension in the region threatens the oil supply chain.
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While Iran’s oil infrastructure has remained out of harm’s way, some are worried that it could retaliate by blocking the Strait of Hormuz, a gateway for nearly 20% of global oil shipments. However, the country has not mentioned a plan to block access to the Strait, as oil exports account for a large portion of its government revenue.
S&P 500 Drops on Global War Fears
Stocks are falling this morning as the market braces for the risk of other countries getting involved in the Israel-Iran conflict. In addition, higher oil prices result in increased costs for both individuals and corporations, negatively affecting the pockets of consumers, increasing transportation costs, and contributing to inflation. Higher geopolitical tensions can also reduce sentiment and increase economic uncertainty.
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