Crude prices near $93 a barrel heighten equity risks as historical data shows stocks suffer more from spikes than dips.
Morgan Stanley’s chief U.S. equity strategist flagged a renewed oil price surge as the top near-term threat to American equities. Brent crude has climbed 13% in two weeks, trading between $91 and $93 a barrel after a 30% rebound from early July lows.
Historically, equities face material pressure only when oil prices rise 75% to 100% year over year. Such spikes occurred in just five of 23 geopolitical shock events studied. The current rally follows a drop from April’s $114 peak amid easing Iran tensions.
The strategist noted oil’s asymmetric impact—stocks decline more sharply during crude rallies than they gain during declines. Recent data shows oil’s beta to equities has been twice as potent on upswings over the past two months.