Oil markets surged Tuesday as the escalating Israel-Iran conflict raised fears of major disruptions to energy flows in the Gulf. Brent crude futures soared above $91 per barrel, marking a $7 jump in one day—the sharpest rise in nearly a year. The U.S. benchmark WTI followed suit, climbing past $87.

Analysts cite mounting concerns over the vulnerability of the Strait of Hormuz, through which about 20% of the world’s oil passes. Any Iranian attempt to block the strait—or Western retaliation—could paralyze global energy flows.

Wall Street Sinks as War Drags On

Meanwhile, U.S. equities tumbled on Tuesday. The Dow Jones Industrial Average fell 2.1%, while the Nasdaq slid 2.3%, dragged down by energy-sensitive sectors and geopolitical risk pricing. Investors fear prolonged regional conflict could reignite global inflation just as central banks eye potential rate cuts.

"Markets are pricing in oil shock and policy paralysis," said Maria Vassilou, senior strategist at Barclays. She noted that if oil passes $100, inflation-linked bonds and energy hedges could spike across portfolios.

Gulf Tensions Rise as Naval Incidents Multiply

Tensions in the Persian Gulf have intensified in recent days. The UAE confirmed an evacuation of 24 crew members from a damaged tanker off Fujairah, amid rumors of an Iranian missile or drone strike. Though Iran denied involvement, insurers and shipping companies have begun adjusting routes and risk premiums.

Traders say insurance costs for ships transiting the Gulf have already doubled since the war began.