Oil prices rise as stocks erase losses sparked by Iran war

The price of oil rose Monday, as a U.S. blockade of Iran’s ports and coastal areas came into effect and President Donald Trump threatened to eliminate any Iranian “fast attack ships” that approached American assets.

The price of U.S. crude oil closed higher by 2.6% to $99.08 per barrel. International Brent oil jumped 4.3% to $99.36 per barrel. Wholesale gas prices also added 2%, while heating oil, a proxy for jet fuel prices, jumped 4%.

Stocks followed a different pattern, though, and traded sharply higher throughout the day on bursts of optimism that the war will somehow be diffused in the near term.

Stocks hit their highest levels of the day after Trump said that he was “called” this morning “by the right people” in Iran. Trump added that “they” want to work on a deal, without specifying who reached out.

By the time the closing bell rang, the S&P 500 was up more than 1%. The index’s Monday rally erased all of its losses since the Iran war began and put it back in positive territory for the year.

The Nasdaq composite closed higher by 1.2%, and the Dow Jones Industrial Average jumped 302 points. Both are essentially flat for the year, and the Dow remains in the red since the war began Feb. 28.

“‘Less bad’ news flow is good enough,” HSBC chief multi-asset strategist Max Kettner wrote in a Monday morning note. “We don’t need a full return to normality in order to fade the moves of the last six weeks.”

The U.S. blockade went into effect at 10 a.m. ET on Monday, but questions remained as to how it would be enforced.

In a Sunday night post announcing the blockade, Trump said he had “instructed our Navy to seek and interdict every vessel in International Waters that has paid a toll to Iran.”

The Strait of Hormuz is one of the most important waterways for oil and other energy products, such as liquefied natural gas. Before the war, hundreds of ships per day passed through it, carrying that energy to the global marketplace.

But on most days since the war began, fewer than 10 ships a day have been able to pass through.

Oil’s renewed surge means gas prices for consumers are expected to resume their rise. Already, unleaded gas prices have risen more than $1.20 per gallon since the war began, to a national average of $4.12 on Monday, according to AAA.

“Reopening the Strait has become the market’s most time-sensitive priority,” JPMorgan Chase commodities analysts wrote. “The last tanker to clear Hormuz on February 28 is expected to reach its destination around April 20, marking the point at which pre-closure barrels are fully exhausted from the global supply chain.”

NBC News Top Stories wp:paragraph