Oil prices blasted past $100 a barrel on Monday as the escalating war between the United States, Israel, and Iran choked off shipping through the Strait of Hormuz, sending global stock markets into a sharp selloff and raising fears of prolonged economic pain for American businesses.
Brent crude briefly touched $119.50 per barrel, its highest level since the summer of 2022, before settling back around $104. U.S. benchmark crude jumped 9.6% to $99.59 per barrel. The spike came as tanker traffic through the Strait of Hormuz, the narrow waterway through which roughly 20% of the world’s daily oil supply passes, slowed to near zero following threats from Iran’s Islamic Revolutionary Guard Corps.
Wall Street and Global Markets Reel From Oil Shock
The Dow Jones Industrial Average plunged 721 points, or 1.5%, in early trading Monday. The S&P 500 fell 1.3% and the Nasdaq dropped 1.2%. Only 47 of the S&P 500’s 503 components traded in the green, with the energy sector the lone bright spot.
International markets fared worse. South Korea’s KOSPI index dropped 6%, Japan’s Nikkei 225 sank 5.2%, and France’s CAC 40 declined 1.7%. Investors scrambled to the U.S. dollar, which rose 0.83% against the euro as the flight to safety accelerated.
Travel and logistics stocks bore the brunt of the selloff. Carnival fell 7.3%, United Airlines dropped 6.9%, and Old Dominion Freight Line lost 3.8%. Retailers including Best Buy and Williams-Sonoma each fell more than 4% as traders priced in higher operating costs for businesses already squeezed by tariffs and inflation.
Small Businesses Face a Growing Fuel Squeeze
At the pump, the national average gasoline price climbed to $3.45 per gallon on Sunday, a 16% increase from the prior week. Analysts at GasBuddy estimated an 80% probability that prices will exceed $4 per gallon within the next month if the conflict persists.
Small businesses that rely on transportation and deliveries are feeling the pressure first. A South Carolina meal delivery operator told CNN that rising fuel costs are already cutting into thin margins. Trucking operators report that the recent fuel spike has added roughly $100 per week to their fuel bills, costs that will eventually be passed on to customers.
Goldman Sachs warned that if oil prices remain elevated for several months, U.S. consumer price inflation could climb from 2.4% in January to 3% by year’s end. That trajectory could delay any Federal Reserve interest rate cuts in 2026, keeping borrowing costs high for startups and small businesses seeking capital.
The Strait of Hormuz at the Center of the Crisis
The current disruption traces back to joint U.S. and Israeli military strikes on Iran that began on February 28, including an attack on a Tehran oil depot. Iran responded with retaliatory missile and drone strikes on U.S. military bases, Israeli territory, and other Gulf states. The IRGC then warned all commercial vessels against entering the strait.
Tanker traffic dropped roughly 70% in the first days of the conflict before coming to a near standstill. Over 150 ships anchored outside the waterway to wait out the crisis. Iraq’s oil output has collapsed by 60%, and production shutdowns in Kuwait have further tightened supply. The disruption extends beyond crude oil, as approximately 33% of the world’s fertilizer shipments, including sulfur and ammonia, also pass through the strait.
What Comes Next for the U.S. Economy
Economists are now warning of stagflation risks if oil prices remain above $100 for an extended period. Higher energy costs ripple through supply chains, raising the price of goods from groceries to construction materials. For the roughly 33 million small businesses that power the U.S. economy, the combination of elevated fuel prices, persistent inflation, and tight credit conditions represents a significant headwind heading into the second quarter of 2026.
Oil prices moderated slightly from their intraday highs on Monday after reports of a coordinated international response to the crisis, but analysts cautioned that the situation remains highly volatile. Any further escalation near the Strait of Hormuz could send prices back toward record territory.
