On Thursday, oil prices experienced volatility amid heightened tensions between the U.S. and Iran, following military strikes and threats from President Trump regarding Iran's nuclear negotiations. Brent crude rose to around $93 per barrel while West Texas Intermediate hovered around $90. The potential for further conflict and disruptions, particularly in the pivotal Strait of Hormuz, contributed to these price fluctuations. In response to the situation, U.S. gasoline prices dropped slightly to an average of $4.13 per gallon, despite rising 39% since the onset of the conflict. Meanwhile, the S&P 500 saw slight gains in the U.S., while mixed performance was observed in Asian and European stocks. Economists, including Diane Swonk from KPMG, warned of persistent inflation pressures and the Federal Reserve's challenging position regarding rate hikes, with expectations of potential increases later in the year.

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Oil prices were volatile on Thursday after the United States and Iran exchanged fire for a second straight day and President Trump threatened further attacks would come that evening, heightening fears that the two countries could slide back into broader conflict.

The United States said it had struck multiple targets across Iran after Mr. Trump vowed to maintain military pressure because negotiations with Iranian leaders over its nuclear program were moving too slowly. Mr. Trump said on his social media site that at “some point in the not too distant future” the United States would “assume total control” of Iranian oil and gas.

Iran said it retaliated with two waves of attacks on targets at U.S. bases in Kuwait and Bahrain, though there was no immediate confirmation of the strikes.

Here is the latest:

Oil prices seesaw.

The price of Brent crude, the global benchmark for oil, rose sharply in early trading before easing back and moving between gains and losses, at around $93 a barrel.
West Texas Intermediate crude, the U.S. benchmark, followed a similar pattern, trading around $90 a barrel.
Investors and analysts are focused on the continued disruption to shipping in the Strait of Hormuz, the narrow waterway between Iran and Oman that is a vital trading route for oil and natural gas that normally carries as much as one-fifth of the world’s oil supply.
Despite the escalating tensions, oil markets had remained relatively subdued in recent days, showing little reaction since the downing of a U.S. Army Apache helicopter near the Strait of Hormuz on Monday.

Jan.MarchMay$0$20$40$60$80$100 per barrel

Stocks are mixed.

In the United States, the S&P 500 posted slight gains as the trading day began Thursday.
Stocks in Asia, where countries import vast quantities of oil and gas, were little changed at the end of the trading day, with shares in Taiwan posting a small decline while stocks in Japan and South Korea recorded modest gains.
In Europe, stocks rose. The Stoxx 600, a broad index that tracks the region’s largest companies, gained about half a percent in early trading.

Jan.MarchMay55,00060,00065,000

Oil Prices Fluctuate as Trump Issues New Threat to Strike Iran - The New York Times

Gasoline prices pull back.

U.S. gasoline prices edged lower on Thursday to a U.S. national average of $4.13 a gallon, according to the AAA motor club. Gas prices have risen 39 percent since the war began.
Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
The average price of diesel dropped to $5.28 on Thursday but is up 40 percent since the start of the war.

\ \ How High Are Gas Prices Where You Live? \ \ Here is a county-level look at where drivers are facing the highest costs.

What they are saying: Inflation is ‘taking on a life of its own.’

Diane Swonk, the chief economist at KPMG US, warned that accelerating inflation related to the war in Iran had put the Federal Reserve, which is charged with keeping prices in check, in a difficult spot. “Delaying rate hikes is riskier today than it was as the economy emerged from the pandemic,” she wrote. “Inflation has lingered longer and shows signs of taking on a life of its own.”
“We are now five years into the post-pandemic bout of inflation,” she noted. “The Federal Reserve did not cause all of it, but it is the institution charged with bringing it down.” Despite the political pressure on Kevin Warsh, who recently took over as Fed chair, to cut interest rates, Ms. Swonk expects officials at the central bank to be convinced to raise rates later this year.
The European Central Bank raised interest rates on Thursday, making it the first major central bank to do so since the start of the war with Iran.
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Oil Prices Fluctuate as Trump Issues New Threat to Strike Iran

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Here is the latest:

Oil prices seesaw.

Stocks are mixed.

Gasoline prices pull back.

What they are saying: Inflation is ‘taking on a life of its own.’

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