[New York Stock Exchange] Indexes Fall Over 1% After "Hormuz Blockade" Statement

Brent Closes Above $100 a Barrel
International Oil Prices Surge After Mojtaba's Hardline Statement
U.S. Energy Secretary: "Tanker Escorts Possible by End of This Month"

AFP Yonhap News

Amid concerns over a surge in oil prices and the potential for private debt defaults, the three major U.S. stock indexes ended lower on March 12 (local time) after Iran's new Supreme Leader stated that the country would continue to blockade the Strait of Hormuz.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 46,677.85, down 739.42 points (1.56%) from the previous session. The S&P 500, which focuses on large-cap stocks, fell 103.18 points (1.52%) to 6,672.62, while the tech-heavy Nasdaq dropped 404.155 points (1.78%) to close at 22,311.97.

The market reacted strongly to a statement from Seyyed Mojtaba Khamenei, Iran's Supreme Leader. In his first statement following his appointment, Supreme Leader Mojtaba announced that Iran would continue the blockade of the Strait of Hormuz and expressed his intention to escalate the frontlines, sending international oil prices soaring.

Earlier, Chris Wright, U.S. Secretary of Energy, said in an interview with CNBC that "the U.S. Navy is not currently prepared to escort oil tankers," but added that they could provide escorts by the end of this month. Investor sentiment deteriorated as it became a near certainty that energy transport through the Strait of Hormuz would be paralyzed for the next two weeks.

In particular, Brent crude for May delivery surged 9.2% from the previous day to close at $100.46 per barrel. This marks the first time Brent crude has closed above $100 per barrel since August 2022. The April West Texas Intermediate (WTI) futures contract also rose 9.7% to settle at $95.73 per barrel.

Shares of oil refiners and energy companies saw significant gains. ExxonMobil rose 1.59%, Chevron 2.98%, Occidental Petroleum 5.72%, Diamondback Energy 0.49%, and APA 2.43%. Defense industry stocks, including Lockheed Martin (up 0.52%), AeroVironment (up 2.08%), and Northrop Grumman (up 0.83%), also finished higher.

In a report, Adam Crisafulli of Vital Knowledge analyzed, "Iran's strategy of fomenting economic chaos in the Gulf region is proving effective. With repeated attacks on oil tankers and the closure of the Strait of Hormuz, Brent crude prices have risen close to $100 per barrel."

He added, "Although the U.S. and Israel maintain military superiority and Iran's missile and nuclear programs may have weakened, Tehran's hardline regime remains firmly in place, and their plan appears to be using oil to drive President Trump further into a corner."

To counter the rise in international oil prices, the United States announced the previous day that it would release 172 million barrels of crude oil, but it is expected to take about 120 days for the release to be completed.

Anthony Saglimbene, Chief Market Strategist at Ameriprise, pointed out that "if energy costs and gasoline prices remain at current levels or rise for a period due to changes in the Middle East situation, this could weigh on consumer sentiment and further highlight purchasing power issues as the midterm elections approach."

Technology and semiconductor stocks both closed lower. Nvidia fell 1.53%, Apple 1.71%, Microsoft 0.60%, Alphabet 1.28%, and Meta 2.32%. TSMC and Broadcom dropped 4.93% and 1.68%, respectively.

Meanwhile, on the New York Mercantile Exchange (COMEX), April gold futures fell 1% to close at $5,125.80. The dollar index, which measures the value of the U.S. dollar against the currencies of six major countries, rose 0.54% from the previous session to 99.76.

Phillip Streible, Chief Market Strategist at Blue Line Futures, explained, "The rise in the dollar index, higher U.S. Treasury yields, and the absence of interest rate cuts are all negative factors for gold prices. However, the conflict in the Middle East is creating some demand for safe-haven assets."

This content was produced with the assistance of AI translation services.