Oil prices once again became the star of the market on Thursday. Brent crude closed up about 4.07% at $104.28; WTI rose about 3.64% to $91.49. There were three drivers: several tankers were attacked within a week near the Strait of Hormuz; hurricane activity in the U.S. Gulf of Mexico shut in about 500,000 barrels per day, roughly a quarter of local production capacity; and the U.S. continued to expand sanctions on Iran's "shadow fleet," with the Treasury also naming more than a dozen related vessels.
Oil prices rose even higher intraday because Trump said on Wednesday night that he did not want to reach a deal with Iran; on Thursday he also posted that the U.S. would not attack Iran before the midterm elections, and only then did oil prices pull back from their highs, though they remained strong on a weekly basis. The energy sector became the biggest gainer in the S&P 500, and Chevron and others helped lift the Dow into positive territory. The national average gasoline price has climbed to about $4.36 per gallon, far above prewar levels, directly eroding household spending power.
Oil prices and interest rates are linked. Energy inflation makes it harder for the Federal Reserve to pivot toward easing, and explains why officials are still talking about rate hikes. Only if there is meaningful relief ahead and oil prices fall back into the $70–$90 range can long-term U.S. Treasury yields be expected to decline on a sustained basis. Otherwise, yields in the 5%–6% range may become the new normal, and the pressure of discount rates on growth stocks will persist.
My view: Oil above $100 is a headwind for growth stocks and a tailwind for energy stocks. You could keep some energy exposure in your portfolio as a hedge while scaling back bets on “rate cuts coming soon.” The key near-term level is whether Brent can hold above $100; if it breaks below that level, risk appetite could rebound quickly.
The indirect impact on domestic investors is also significant: rising oil prices feed through to chemicals, shipping, and inflation expectations, while also amplifying volatility in dollar-denominated assets. Whether you invest in U.S. stocks or crypto, “whether oil can hold above $100” should be a macro variable you check every day.
The above is for informational purposes only and does not constitute investment advice.