Oil falls and stocks steady after a day of drastic swings

Markets kept their footing Tuesday, with oil falling and stocks roughly flat, even as the United States intensified airstrikes on Iran and tanker traffic remain stalled.

For more than a week, investors around the world have been on high alert for signs of how the war with Iran started Feb. 28 by the United States and Israel would affect the global economy, particularly because of disruptions to energy production and supply chains.

The price of Brent crude, the global benchmark for oil, spiked to nearly $120 a barrel Monday before President Donald Trump told CBS News that the war with Iran was “very far ahead of schedule.” Investors’ concerns about the conflict’s long-term economic fallout were assuaged and the price of oil plunged to below $90 a barrel after his remarks were published. On Tuesday, Brent settled at $87.80 a barrel.

The S&P 500 ended Tuesday 0.2% lower, after a brief gyration prompted by Energy Secretary Chris Wright’s social media post stating that the U.S. Navy had successfully escorted an oil tanker through the Strait of Hormuz. Wright’s post on X drove up stocks briefly. But the post was soon deleted, a White House official said no escort had taken place and stocks pared back their gains. U.S. government bond yields also rose in response to the deleted post, meaning their price fell.

The episode showed how attuned investors have become to every turn of the Iran war as it moves into its second week, with a potential resolution to stop the fighting and fully restore oil shipments still unclear, despite Trump’s remarks

On Tuesday, stocks in Europe rose, with the Stoxx 600 index up almost 2%. The price of West Texas Intermediate crude, the U.S. benchmark, was about $89 a barrel.

Stocks in Asia recover

Equity markets across Asia rose, largely taking back what they lost the day before. The biggest gainers were the KOSPI index in South Korea, which went up 5%. Stocks in Japan and Taiwan rose about 2% to 3%. The national economies of Asia, which import most of their oil and gas, are extraordinarily exposed to the shock of suddenly rising energy costs.

Global bond markets

Government bonds rose in Europe, with yields falling, lowering borrowing costs. The moves came because the drop in oil prices eased some concerns about a resurgence of inflation. The yield on 10-year German bonds was flat at 2.86%, while the yield on 10-year U.K. bonds fell 0.06 percentage points, to 4.59%.

Oil price remains in focus

The escalation in the Middle East has brought the transport of oil and gas through the Strait of Hormuz, a narrow passage between Iran and Oman, to a virtual standstill. Even if fighting stops soon, officials and analysts say the disruption to energy supplies could last weeks. It’s been several years since the oil price touched these levels.

Gasoline keeps going up

Gasoline costs, which typically lag changes in the price of oil, are continuing to go up. The latest data from the AAA motor club, released Tuesday, showed that U.S. gas rose to an average of $3.54 a gallon. That is 19% higher than it was before the U.S.-Israeli strikes on Iran began. But gasoline prices are not a concern only in the United States. From Asia to Europe, governments are concerned about how daily fuel costs could drive inflation higher, adding to the cost of living struggles of their citizens.

This article originally appeared in The New York Times.