Tensions Continue Rising In The Middle East. Stocks Climbed And Oil Dropped Anyway
Stocks rose on Thursday and oil dropped even though tensions between the U.S. and Iran remain high.
The Dow Jones Industrial Average climbed 0.27%, while the S&P 500 did so by 0.81%. The tech-heavy Nasdaq Composite overperformed, climbing 1.30% as semiconductors shares soared, led by Micron and Sandisk. The VanEck Semiconductor ETF gained 3%. Micron received a strong endorsement from investors Thursday after the memory chip giant unveiled billions of dollars in new investments designed to strengthen the domestic chip supply chain and meet surging demand fueled by artificial intelligence.
At the same time, oil prices reversed earlier gains and dropped despite mounting tensions in the Middle East. Brent crude, the international benchmark, dropped 2.50% and clocked in at $76.07 per barrel at 4:05 p.m. ET, while West Texas Intermediate, the U.S. benchmark, fell by 2.29% and stood at $71.84 per barrel at the same time.
Prices are decreasing even though data showed that traffic through the Hormuz Strait decreased again following renewed clashed between the U.S. and Iran.
Matt Smith, director of commodity research at the trade intelligence firm Kpler, told CNBC that only 13 ships crossed the waterway on Wednesday, compared to an average of 33 per day over the previous week.
The Joint Maritime Information Center again raised the threat level in the Strait of Hormuz to severe after clashes resumed.
It is the second-highest level in the NGO’s scale, only behind critical. It had been lowered to substantial after the two countries signed a memorandum of understanding to end the war and kick off nuclear negotiations.
The organization said vessels could face “deliberate hostile action” by Iran under current conditions. Tehran this week launched missiles at ships crossing the waterway through a route closer to the Omani coast, which does not approve of and is protected by the U.S. Navy. The country insists it’s in control of the strait following the war with the U.S. and only ships that coordinate with its authorities.
President Donald Trump said he doesn’t “know” whether the U.S. and Iran are set to go back to a full-scale war, but claimed Tehran “badly” wants to deescalate the renewed hostilities.
Speaking to press aboard Air Force one while returning to the U.S., he said that should such a scenario take place, the U.S. would “win it very quickly.”
“They have very little left, and they want to make a deal so badly. They called a little while ago. They want to make a deal so badly. I just don’t know if they’re worthy of making a deal. I don’t know that they’re going to honor the deal. That’s the problem,” he added.
