Stocks Rise Early as Oil Holds Above $100 Amid Iran War Uncertainty

U.S. stocks rose in early Tuesday trading as investors balanced a rebound in risk appetite against persistent geopolitical tension tied to the Iran war and disruptions in global energy markets. The Dow Jones Industrial Average climbed to 45,800, while the S&P 500 rose to 6,440 and the Nasdaq Composite advanced to 21,200.

The primary driver of market sentiment remains the ongoing conflict involving the United States, Israel, and Iran, which has effectively choked off critical oil flows through the Strait of Hormuz. Oil prices held above $100 per barrel, reflecting continued supply disruption and uncertainty around the reopening of the key shipping route.

Energy markets continue to anchor macro positioning. Brent crude has surged sharply in March, with prices reaching as high as $115 per barrel amid fears of prolonged disruption. Analysts warn that the closure of the Strait, through which roughly 20 million barrels per day normally flow, represents one of the largest supply shocks in decades, amplifying inflation risk and complicating central bank policy.

The conflict itself remains fluid. Reports of drone attacks on oil tankers and continued military escalation in the Gulf have reinforced the market’s focus on energy security. At the same time, headlines suggesting potential de-escalation, such as discussions of winding down the conflict, have helped support equity markets in the early session.

Against this backdrop, volatility eased modestly, with the VIX falling more than 8%, indicating a partial normalization after recent spikes. Still, the index remains elevated near 28, underscoring lingering uncertainty.

Research from Apollo Global Management, led by Chief Economist Torsten Slok, highlights the structural imbalance underpinning energy markets. The firm notes a highly unusual setup in which oil markets are in backwardation while natural gas remains in contango, signaling tight near-term crude supply alongside looser gas markets.

Apollo’s analysis also underscores the strategic importance of the Strait of Hormuz, where roughly 20.9 million barrels per day of oil transit, second only to the Strait of Malacca globally. Disruptions at that chokepoint have already driven spikes in tanker rates, fuel costs, and broader energy prices across regions.

On natural gas, the report points to additional stress in Europe, where inventories remain low and production, particularly in the Netherlands, is below historical averages, raising the risk of further price volatility heading into future demand cycles.

Despite these pressures, Apollo’s macro modeling suggests that even a sustained oil shock near $100 per barrel would have only a modest impact on U.S. growth, with limited drag on GDP and employment due to improved energy efficiency and America’s status as a net energy exporter.

Early trading reflected this tension: equities pushed higher on hopes of geopolitical stabilization, while energy markets continued to price in a prolonged supply disruption.

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