Oil Jumps 5.6% To $86.64 As Mideast Strikes Rattle Markets

Brent crude climbed 5.6% to $86.64 a barrel on Wednesday after Iran launched missiles at U.S. forces and the U.S. military, working with Saudi Arabia, struck Tehran-aligned militias in Iraq. The escalation raised concerns about Middle East oil flows and the path of inflation.

U.S. stocks were mixed at 9:35 a.m. Eastern time. The S&P 500 slipped 0.1%, the Dow Jones Industrial Average fell 458 points, or 0.9%, and the Nasdaq composite edged up 0.1%. In bonds, the 10-year U.S. Treasury yield inched up to 4.62% from 4.61% late Tuesday.

Oil trading has been volatile in July. Brent fell to $72 earlier in the month and reached $102 last week amid uncertainty over a possible arrangement to allow tankers to move more freely from the region. Renewed fighting lifted prices as markets assessed potential shipping disruptions and inflation risks.

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Interest-rate expectations remained in focus ahead of the Federal Reserve’s decision later Wednesday. Market pricing pointed to about a 36% chance of a rate increase, which would be the first in three years. Higher rates are used to curb inflation but can slow growth and pressure stock valuations.

Technology shares faced pressure in Asia. South Korea’s Kospi index dropped 6% on Wednesday after a 10.8% slide the prior session. SK Hynix fell 9.6% after posting record quarterly revenue and profit driven by demand for AI chips; revenue rose 257% but missed forecasts. Elsewhere, Hong Kong’s Hang Seng gained 2%, while France’s CAC 40 slipped 0.7%.

Traders prepared for the Fed’s statement and press conference at the end of its two-day meeting later in the day.