U.S. stock futures fell on Thursday as oil prices surged following Houthi militant attacks on two Saudi Arabian tankers in the Red Sea and disappointing earnings from Alphabet and Tesla weighed on sentiment.
Dow Jones Industrial Average futures were off 341 points, equivalent to a 0.65% decline, with S&P 500 futures down 0.64% and Nasdaq 100 futures losing 0.89%
Brent crude futures climbed roughly 5% to top $98 a barrel, and U.S. West Texas Intermediate futures were up about 4.5% to approximately $90.95 a barrel. The two benchmarks had not traded this high since before Washington and Tehran struck a deal to halt hostilities last month.
Yemen’s Tehran-backed Houthi militant group said it was behind strikes on two Saudi tankers in the Red Sea, heightening anxiety over a potential broadening of the Middle East conflict. Prices extended their gains after U.S. President Donald Trump threatened to bomb Iranian infrastructure. “The strikes between the U.S. and Iran show no sign of easing, and the Houthis said they targeted two oil tankers in the Red Sea yesterday, raising fears that the conflict is widening,” Deutsche Bank’s Jim Reid wrote in a note on Thursday. “So that’s pushed oil prices up to a 7-week high and has also fueled speculation about more rate hikes.” Rising oil prices pushed government bond yields higher, particularly in Europe, reflecting concern that inflation could accelerate again.