Oil rises to $107 and sinks stock markets due to tension with Iran
WHAT HAPPENED
Brent oil rose more than 2.5% to nearly $107 per barrel and WTI reached $95. The tension between the U.S. and Iran and attacks near Saudi facilities increased fears of supply disruptions.
WHY IT MATTERS
About one-fifth of the world's oil passes through the Strait of Hormuz. If the conflict affects that route or Saudi facilities, there would be less crude available: gasoline and transportation would rise first, followed by food, clothing, and other products.
AND FOR YOUR PORTFOLIO
For a long-term investor, expensive oil can pressure the profits of companies that spend heavily on transportation and reduce the money available for consumers. It also benefits crude producers, but increases uncertainty and has already caused declines in U.S. stock markets.
💬 TELL IT LIKE THIS
“When oil rises due to a crisis, the bill usually arrives first at the gas station and then at the supermarket.”