NEW YORK (AP) — Stock markets shuddered worldwide Monday on worries about whether the global economy can withstand spiking prices for oil, which briefly got to nearly $120 per barrel, their highest level since four summers ago.
The S&P 500 fell 1%, coming off its worst week since October. The Dow Jones Industrial Average was down 576 points, or 1.2%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.8% lower. That followed even worse losses in European and Asian stock markets.
Since the war with Iran began with attacks by the United States and Israel, the central worry for financial markets has been how high oil prices will go because of it and how long they will stay there. Early Monday, the price for a barrel of Brent crude, the international standard, briefly touched $119.50. It hasn’t been that expensive since the summer after Russia invaded Ukraine in 2022, another military conflict that likewise raised the risk for blockages in the global flow of oil.
If oil prices stay very high for very long, households’ budgets that are already stretched by high inflation could break under the pressure. Companies, meanwhile, would see their own bills jump for fuel and to stock items on their store shelves or in their data warehouses. It all raises the possibility of a worst-case scenario for the global economy, one called “stagflation,” where growth stagnates and inflation remains high.
