Brent crude tops $84 on Hormuz tension, AI stocks retreat
Surging oil prices triggered by a US blockade in the Strait of Hormuz threaten to reignite inflation just as a sharp selloff in artificial intelligence stocks shakes global equity markets.
Brent crude climbed to just over $84 a barrel on Tuesday, building on a near 10% surge the previous day, as the United States and Iran each asserted control over the Strait of Hormuz. US benchmark crude added 1.4% to reach $79.20. The price acceleration followed US strikes on Iran and President Donald Trump’s declaration that Washington was “reinstating” a blockade on the strategic waterway.
Tankers are avoiding the Persian Gulf route, driving up fuel prices worldwide. While crude remains well below its wartime peak of nearly $120 a barrel, the sudden supply uncertainty poses a direct threat to European inflation targets. Sustained higher energy costs could force the Federal Reserve and European central banks to raise interest rates, a move that would slow economic growth and drag down investment prices.
The geopolitical shock compounded existing pressures on global equity markets, with Asian shares leading a broad decline overnight. Seoul’s Kospi dropped 3.2% to 6,589.37 and Tokyo’s Nikkei 225 lost 1% to close at 66,574.96. Australia’s S&P/ASX 200 shed 0.5% to 8,767.00.
In China, the Shanghai Composite lost 0.8% to 3,884.32 despite the government reporting a 27% jump in June exports driven by artificial-intelligence chip demand. Hong Kong's Hang Seng was a rare bright spot, edging 0.1% higher to 24,230.46.
Wall Street futures fell 0.3% early Tuesday after major indexes posted steep losses on Monday, coming off their fourth winning week in the last five. The Nasdaq composite sank 1.6%, the S&P 500 fell 0.8%, and the Dow Jones Industrial Average dropped 0.3%.
Nvidia fell 3.5%, acting as the single heaviest weight on the S&P 500 due to its massive valuation, while Micron Technology dropped 4.4%, trimming a year-to-date rally of 243.1%. Investors are increasingly worried that stock prices have risen too high and that demand will falter if artificial intelligence fails to deliver expected profits and productivity.
Market attention is now pivoting to quarterly earnings to see if corporate reality can match these elevated expectations. Analysts forecast overall S&P 500 profit growth of 23.6% from a year ago, which would mark a second consecutive quarter above 20%. Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs and Wells Fargo are all releasing results on Tuesday, facing pressure to deliver strong growth to justify record-adjacent index levels.
In currency markets, the euro rose to $1.1391 from $1.1381. The US dollar slipped marginally against the Japanese yen to 162.34 from 162.35.
