Oil Prices Near $90 Amid Latest Iran Threat; S&P 500 Slips

• Iran's blockade of the Strait of Hormuz has disrupted 20 million barrels per day (20% of global consumption), forcing Iraq, Kuwait, Saudi Arabia, and UAE to cut output due to storage capacity limits
• Iraq reduced production to just 1.3 million barrels per day from 4.3 million before the war, while Iran's missile attacks are down 90% and drone attacks down 83% since day one
• Major oil stocks declined despite rising crude prices, with Occidental Petroleum down 3%, ConocoPhillips down 1.8%, and G7 energy leaders considering joint petroleum reserve releases to limit price spikes

Market Summary: Oil Prices Surge Near $90 on Iran Escalation

Key Developments:

Oil prices rebounded to approximately $90 per barrel after briefly retreating to $85 from an intraday peak near $120. Iran escalated tensions by threatening to block "even a single liter of oil" exports from the region and launching new missile and drone attacks on Israel, UAE, and Qatar. Defense Secretary Pete Hegseth announced the U.S. would deliver its "most intense day of strikes inside Iran" on Tuesday.

Critical Supply Impact:

The Strait of Hormuz—which typically handles 20 million barrels per day (20% of global consumption)—is effectively shut down. Iraq, Kuwait, Saudi Arabia, and UAE have reduced output due to storage capacity constraints. Iraq specifically cut production to 1.3 million barrels daily from 4.3 million pre-war levels. Rapidan Energy Group characterized this as "the largest oil supply loss in history, by a factor of two," exceeding the 1956-57 Suez Crisis.

Market Response:

S&P 500 futures declined 0.2% ahead of Tuesday's open, following Monday's 0.8% rebound. The index remains 2.6% below its January 27 record high. Major oil stocks traded lower: Occidental Petroleum down 3%, ConocoPhillips off 1.8%, Marathon Petroleum down 1.2%, and Chevron declining 1%.

Future Outlook:

CME Group futures show July oil contracts trading below $80, suggesting markets anticipate limited Iranian capacity for prolonged conflict. Pentagon reports indicate Iran's daily missile attacks declined 90% and drone attacks dropped 83% since day one. G7 energy leaders are scheduled to discuss potential joint petroleum reserve releases at 2 PM ET to stabilize prices.