Dow Drops 170 Points as Iran Conflict Risks Rattle Markets; Oil Slides

U.S. stocks drifted lower early Tuesday as investors assessed escalating tensions in the Middle East and warnings that disruptions to global energy supplies could threaten the broader economy.

The Dow Jones Industrial Average fell 169.01 points, or 0.35%, to 47,571.8, while the S&P 500 declined 15.86 points, or 0.23%, to 6,780.13. The Nasdaq Composite edged higher, rising 10.75 points, or 0.05%, to 22,706.7.

Markets opened cautiously as geopolitical risks intensified following warnings from Saudi Arabia’s state oil giant. Saudi Aramco CEO Amin Nasser said continued disruption from the Iran conflict could have “catastrophic consequences” for global oil markets and the broader economy.

The conflict has already begun affecting shipping routes, insurance markets and energy logistics across the region. Nasser said Aramco is increasing shipments through the East-West pipeline that runs across Saudi Arabia to the Red Sea, a route designed to bypass the Strait of Hormuz, a critical chokepoint for global crude exports.

Adding to the uncertainty, the Pentagon said Tuesday it was conducting the most intense day of attacks against Iran since the conflict began, signaling the U.S.-Israeli military campaign could extend longer than investors initially anticipated.

Despite the geopolitical escalation, oil prices moved sharply lower in early trading. West Texas Intermediate crude for April delivery dropped $5.78, or 6.10%, to $88.99, reflecting volatile positioning as traders balance potential supply disruptions against global demand expectations.

Within equities, investors continued to favor major technology companies tied to artificial intelligence and cybersecurity. Analysts at Wedbush Securities said several AI leaders remain well positioned to navigate geopolitical volatility, including Microsoft, Apple, Palantir, CrowdStrike and Palo Alto Networks.

Cybersecurity firms and defense-linked software providers could see sustained demand if geopolitical tensions remain elevated, analysts said, as governments and corporations increase spending on digital security and intelligence tools.

Looking ahead, markets are likely to remain highly sensitive to developments in the Middle East, particularly any disruption to oil flows through the Strait of Hormuz. Escalation in the conflict could increase volatility across global energy markets and equities in the days ahead.