GLOBAL financial markets tumbled on Thursday as a worsening conflict with Iran pushed oil prices back to the $100-per-barrel mark and revived fears of inflation and economic instability.

The benchmark S&P 500 fell 1.5 percent in the U.S., ending a brief period of calm after days of volatility. The Dow Jones Industrial Average dropped 739 points, or 1.6 percent, while the Nasdaq Composite declined 1.8 percent as investors reacted to rising geopolitical risks and surging energy prices.

Oil markets remained the focal point of global trading. The price of Brent crude surged to $101.3 per barrel at 10pm Nigerian time, driven by fears that the conflict could disrupt oil production across the Persian Gulf and fuel a renewed wave of global inflation.

Tensions escalated after Iran’s new supreme leader issued his first public statement since taking power, declaring that Tehran would continue attacks on Gulf Arab states and maintain pressure on the United States and Israel by effectively closing the Strait of Hormuz. The narrow passage typically carries about one-fifth of the world’s oil shipments, and several regional producers have begun cutting output as tankers struggle to move crude through the route.

READ ALSO: Iran’s Hormuz mines threaten one-fifth of global oil trade

In response to the tightening supply outlook, the International Energy Agency (IEA) said its member countries would release a record 400 million barrels of oil from emergency reserves to stabilise global markets.

Despite the latest sell-off, the U.S. stock market has historically recovered quickly from geopolitical shocks if energy prices stabilise. Even with the sharp swings of recent weeks, the S&P 500 remains only about 4.4 percent below the record high it reached in January, according to the Associated Press.

However, the recent surge in crude prices has unsettled investors not only because of its magnitude but also because it comes at a fragile moment for the global economy.

Economic data from the United States recently raised concerns about a potential bout of stagflation, a scenario in which slow economic growth coincides with persistently high inflation. Weak hiring figures last month intensified those fears, leaving policymakers with limited options to support growth without worsening price pressures.

There were, however, some positive signals from the labour market. Weekly data showed the number of Americans filing for unemployment benefits edged slightly lower, suggesting layoffs remain relatively contained.

Corporate earnings also drew attention. Discount retailer Dollar General posted quarterly profit and revenue that exceeded analysts’ expectations, though its outlook for the coming year hinted at slowing sales growth. Shares of the company still fell 6.1 percent, reflecting broader concerns about consumer spending as fuel costs rise.

Energy-intensive companies were among the hardest hit on Wall Street. Shares of Carnival Corporation & plc dropped 7.9 percent, while United Airlines declined 4.6 percent as higher fuel costs threaten profit margins.

Investors also remained uneasy about the private-credit sector, where funds that lend to businesses have faced withdrawals amid concerns that some borrowers could struggle to repay loans, particularly as competition from AI-driven companies pressures profits.

Assets’ performance

Shares of Morgan Stanley fell 4.1 percent after its North Haven Private Income Fund allowed investors to redeem only 5 percent of total shares – the maximum permitted under the fund’s rules – despite requests to withdraw nearly 11 percent.

READ ALSO: Oil prices surge amid Iran’s warning over possible ground invasion

By the close of trading, the S&P 500 had dropped 103.18 points to 6,672.62. The Dow Jones Industrial Average fell 739.42 to 46,677.85, while the Nasdaq Composite slid 404.16 points to 22,311.98.

Japan’s Nikkei 225 declined 1 percent, and France’s CAC 40 slipped 0.7 percent. In the Nigerian Exchange Limited (NGX), Investors gained N541 billion at the close of trading on Thursday after losing N107 billion the previous day.

Meanwhile, yields on U.S. government debt climbed as investors reacted to rising oil prices. The yield on the 10-year US Treasury note rose to 4.26 percent, up from 4.21 percent a day earlier and 3.97 percent before the conflict began.

Higher bond yields increase borrowing costs across the economy, affecting everything from mortgages to corporate debt issuance, while also weighing on the valuation of assets such as stocks and cryptocurrencies.

With energy prices surging, traders have pushed back expectations for when the Federal Reserve might resume cutting interest rates. Meanwhile, Donald Trump has repeatedly called for lower rates to stimulate economic growth and employment, even as policymakers remain wary of fueling further inflation.