Oil prices plunged and U.S. stocks climbed Monday as investors bet that Iran’s missile launches toward American military bases would not escalate into broader conflict.
Crude prices fell sharply after reports suggested the strikes, aimed at sites in Iraq and Qatar, were intercepted. West Texas Intermediate dropped 7.2% to $68.51 a barrel — its steepest single-day fall since early April — pulling oil below $70 for the first time in nearly three weeks. That marks a dramatic reversal from Sunday, when prices surged to nearly $78.
Stocks rebounded on the retreat in energy prices. The Dow Jones Industrial Average added 374 points, or 0.89%, while the S&P 500 and Nasdaq gained nearly 1% each. Analysts said cooling oil prices reduced fears of inflationary pressure on businesses and consumers.
“The market is reading this as a symbolic strike rather than a serious escalation,” said Kirk Lippold, former U.S. Navy commander. “Each missile carries risk, but Iran’s restraint suggests it’s not looking to prolong the confrontation.”
Investors appear to be hoping this marks the end of Iran’s response to recent U.S. and Israeli strikes on Iranian nuclear sites. Officials in Doha were reportedly warned ahead of time about the incoming missiles, which some experts view as an effort to avoid casualties and keep diplomatic options open.
In contrast, Iran previously launched what it described as “hundreds” of missiles at Israel in mid-June, a much larger response to earlier hostilities.
Despite the geopolitical tension, so-called safe-haven assets like gold and government bonds saw little movement. Gold rose just 0.2%, while U.S. Treasury yields dipped slightly. The dollar also slipped 0.3% after rising earlier in the day.
Rapidan Energy’s Bob McNally said markets are waiting for a real supply disruption before pricing in a major oil shock. “We’ve seen many false alarms. Unless Iran actually blocks energy flows, spikes will be short-lived,” he said.
Still, some uncertainty remains. Iran’s state media has threatened to close the Strait of Hormuz — a key global oil route — but there’s been no move yet. Traders and analysts say that would be the true trigger for a deeper crisis and higher prices.
For now, Wall Street is cautiously optimistic that the worst may be over — at least for energy markets.
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