Dow tumbles 500 points, oil spikes 5% as Iran tensions stoke fear on Wall Street

The US stock market pulled back from its record heights Monday, while oil prices jump with uncertainty about when oil tankers can resume crossing the Strait of Hormuz and restore the world’s flow of crude. Escalations in the Middle East are heightening tensions in the war with Iran and may be undermining a ceasefire.The Dow Jones Industrial Average was down 542 points, or 1.1%, in midday trading, and the Nasdaq composite was 0.4% lower.The S&P 500 also fell 0.5%, coming off its latest all-time high.The action was stronger in the oil market, where the price for a barrel of Brent crude leaped 5.7% to $114.28.

Iran’s closure of the Strait of Hormuz due to its war with the United States and Israel has kept oil tankers pent up in the Persian Gulf and away from customers worldwide.That in turn has sent the price of Brent soaring from roughly $70 per barrel before the war.President Donald Trump said Sunday that the United States would guide ships through the strait, which could get oil flowing again and bring down its price.

But prices instead climbed after Iranian news agencies claimed Monday that Iran had struck a US Navy vessel southeast of the Strait of Hormuz, accusing it of “violating maritime security and navigation norms.”The US military frejected the claim and then said that two American-flagged merchant ships had successfully transited through the Strait of Hormuz.Later in the morning, oil prices took a sharp turn upward after the United Arab Emirates’ eastern emirate of Fujairah said an Iranian drone sparked a fire at an oil facility, one the UAE has used to avoid shipping some of its oil through the Strait of Hormuz.The UAE issued its first missile alerts since a ceasefire reached in early April.Even with all the uncertainty about how long the war with Iran will last, the US stock market has managed to power to record after record.

Hope is still high on Wall Street that the global economy can avoid a worst-case scenario because of th...