Stocks Drop for Fourth Straight Week as Oil Surges Past $112 Amid Middle East Crisis

Wall Street suffered another bruising week Friday as the S&P 500 tumbled 1.51% to close at 6,506.48, marking its fourth consecutive weekly decline—the longest losing streak since 2023. The Nasdaq Composite plunged 2.01% to 21,647.61, while the Dow Jones Industrial Average dropped 443.96 points, or 0.96%, to end at 45,577.47. The declines came amid a dramatic surge in oil prices, which breached $112 per barrel after Iraq declared force majeure on all foreign-operated oilfields and drones struck two major refineries in Kuwait. The twin crises sent shockwaves through global energy markets and deepened investor anxiety about geopolitical instability and its economic fallout.

Why the Stock Market Is Struggling: Oil Prices Surge Past $112 Amid Middle East Turmoil

The week’s dramatic selloff was triggered by twin developments in the Middle East that sent oil prices soaring. International benchmark Brent crude futures jumped 3.26%, or $3.54, to settle at $112.19 per barrel on Friday—a level not seen since the early days of the Russia-Ukraine war in 2022. U.S. crude oil prices rose 2.27%, or $2.18, to $98.32 per barrel. The surge followed Iraq’s declaration of force majeure, a legal term used to describe unforeseeable circumstances that prevent a party from fulfilling a contract. Baghdad cited its inability to ship crude through the Strait of Hormuz, a critical chokepoint for global oil trade, due to attacks by Iran-linked forces.

The crisis escalated further on Thursday when drones struck the Mina Al-Ahmadi and Mina Abdullah refineries in Kuwait, key facilities for processing and exporting oil. The attacks compounded concerns over supply disruptions in a region already strained by geopolitical tensions. Brent prices climbed nearly 9% over the week, while U.S. crude oil ended largely unchanged. The sudden spike in energy costs threatens to reignite inflationary pressures, which had shown signs of easing in recent months. Investors, already jittery over prolonged central bank policy uncertainty, responded by pulling back from equities, particularly in sectors sensitive to energy costs and economic growth.

The Strait of Hormuz: A Critical Chokepoint in Global Oil Trade

The Strait of Hormuz, a narrow waterway between Iran and Oman, is one of the world’s most critical oil transit points, handling roughly 20% of global crude oil trade. Approximately 17 million barrels of oil pass through the strait daily, making any disruption a major concern for energy markets. Iraq’s decision to declare force majeure was directly tied to the inability of its oil tankers to safely navigate the strait due to escalating maritime security threats. Since early 2026, Iran has intensified its use of drones and proxy forces to target shipping and energy infrastructure in the region, including a March 11 drone strike that ignited a massive fire at the Salalah oil storage facility in Oman. The incident sent a plume of smoke over the Gulf of Oman’s strategic port, further underscoring the fragility of regional energy supply chains.

Broad Market Selloff Hits 80% of S&P 500 Components as Sectors Plunge

The week’s losses were not confined to a single sector. Roughly 80% of S&P 500 stocks ended Friday in the red, highlighting the breadth of the market downturn. Of the index’s 500 components, about 400 traded lower in afternoon trading as the benchmark fell more than 1.5%. Utility stocks led the decline, plunging over 3.5%, followed by real estate and information technology, which both slumped more than 2%. The broad-based selloff reflected rising concerns over higher energy costs, which could erode corporate profit margins and consumer spending power. The S&P 500’s drop also pushed the index to levels not seen in six months, closing at 6,506.48—a level last observed in early September 2025.

Dow’s Four-Week Losing Streak: A Rare Downward Trend Since 2023

The Dow Jones Industrial Average, which had avoided sustained declines in 2025, is on track to record its longest weekly losing streak since 2023. The blue-chip index is down nearly 2% this week, marking its fourth consecutive week of losses—a streak not seen in over three years. The declines have erased about 6% of the Dow’s value for March, putting it on pace for its worst monthly performance since 2022. Despite the recent pullback, the index remains up nearly 10% from a year ago and has posted positive monthly gains for 10 consecutive months—the longest such streak since 2018. However, the sudden reversal in March has raised questions about whether the market’s resilience is waning in the face of persistent geopolitical and economic headwinds.

How Europe’s Energy Resilience Differs from Asia’s Vulnerability to Middle East Supply Shocks

While global oil markets reel from the latest Middle East crisis, Europe appears better positioned to weather the storm than it was during the 2022 Russia-Ukraine war. According to a Friday note from Bank of America, Europe’s resilience stems from two key factors: a 20% reduction in gas demand since 2022 and a more diversified energy supply mix. The European Union now sources only about 10% of its oil and gas from the Middle East, compared to much higher dependence levels in many Asian economies. "Europe is less vulnerable to the Iran energy shock than it was to the fallout of the Russia-Ukraine war in 2022," analysts wrote. By contrast, Asian nations such as China, Japan, and South Korea remain heavily reliant on Middle Eastern oil, leaving them exposed to both price spikes and potential supply shortages as tensions escalate.

Investment Strategies in a Volatile Market: UBS and Goldman Sachs Offer Divergent Guidance

Amid the market turbulence, major financial institutions offered contrasting investment advice. UBS Global Wealth Management, in a Thursday note, urged investors to maintain a long-term perspective and avoid attempting to time the market in response to geopolitical events. "Our recommendation for long-term investors is clear: Stay invested," wrote Mark Haefele, Chief Investment Officer of UBS Global Wealth Management. "History shows that attempts to 'market time' geopolitical events often result in failure." Haefele reiterated UBS’s bullish outlook for equities through year-end, predicting that bond yields would end the year lower and that periods of volatility could present attractive opportunities for investors to deploy cash gradually.

While we hold an Attractive stance on equities overall, we also emphasize regional and sectoral diversification, managing concentration risks, building allocations to quality bonds, broad commodities, gold, and alternatives, as well as making specific reductions to risk and adding hedges where appropriate.

On the other hand, Goldman Sachs highlighted the uneven impact of rising oil prices on different sectors. Analyst Bonnie Herzog warned that consumer staples stocks, particularly those in beauty and household products, would face disproportionate pressure due to their reliance on petrochemicals and resins derived from oil. "Within our coverage, we see the highest risk to our CY26 EPS estimates for PRMB & COTY from rising oil-related input costs," she wrote. Herzog noted that nicotine companies—such as Philip Morris (PM) and Altria (MO)—would be relatively insulated from oil shocks due to their packaging methods, primarily using glass bottles rather than oil-dependent materials like PET plastic.

Key Takeaways: What Investors Should Watch in the Coming Weeks

• The S&P 500 is on track for its worst four-week losing streak since 2023, driven by surging oil prices and geopolitical instability in the Middle East.
• Brent crude oil surpassed $112 per barrel Friday following Iraq’s force majeure declaration and drone attacks on Kuwaiti refineries, raising fears of supply disruptions.
• Nearly 80% of S&P 500 stocks declined Friday, with utilities and real estate leading the selloff as investors brace for higher energy costs.
• Europe appears more resilient to Middle East energy shocks than Asia due to lower demand and diversified supply, according to Bank of America.
• Major banks offered conflicting advice—UBS urged staying invested for the long term, while Goldman Sachs warned of sector-specific risks from rising oil prices.

Historical Context: How This Market Downturn Compares to Past Crises

While the current market pullback is concerning, it is important to contextualize it within historical precedents. The S&P 500’s four-week losing streak pales in comparison to the 2022 bear market, when the index fell nearly 25% amid the Russia-Ukraine war and soaring inflation. However, the recent declines do echo the volatility seen during the 2018 trade war between the U.S. and China, when the S&P 500 endured a 20% correction over three months. Analysts note that while geopolitical tensions are a recurring theme, the market’s reaction this time may be more muted due to lessons learned from past crises and the Federal Reserve’s ongoing efforts to stabilize inflation. Still, the combination of higher oil prices and persistent inflation could test the Fed’s resolve to cut interest rates, adding another layer of uncertainty for investors.

The Role of the Federal Reserve: Will Rate Cuts Offset Energy-Driven Inflation?

The Federal Reserve’s monetary policy remains a critical factor in determining how long the current market downturn lasts. In recent months, investors have bet on multiple interest rate cuts in 2026, anticipating that cooling inflation and a slowing economy would give the Fed room to ease monetary policy. However, the latest surge in oil prices complicates this outlook. Higher energy costs could reignite inflationary pressures, potentially delaying or reducing the scope of rate cuts. "The Fed is likely to tread carefully," said Sarah House, senior economist at Wells Fargo. "If oil prices remain elevated, inflation could reaccelerate, forcing the Fed to maintain a tighter policy stance for longer." The central bank’s next meeting, scheduled for late April, will be closely watched for any shifts in tone or policy guidance. A hawkish stance could exacerbate the market’s recent weakness, while a dovish pivot might provide some relief.

What’s Next for Oil Markets? Analysts Weigh Supply Risks and Price Outlook

The outlook for oil prices remains highly uncertain, with analysts divided over whether the recent surge is temporary or the beginning of a prolonged supply crunch. On one hand, Iraq’s force majeure declaration and the attacks on Kuwaiti refineries suggest that supply disruptions could persist as long as tensions in the Strait of Hormuz remain elevated. On the other hand, OPEC+ has signaled its willingness to increase production if necessary to stabilize markets. "The market is in a state of flux," said Helima Croft, global head of commodity strategy at RBC Capital Markets. "The question is whether the current disruptions are enough to trigger a supply response from OPEC+ or if we’ll see further escalation in the conflict." Meanwhile, the U.S. Energy Information Administration (EIA) has projected that global oil inventories will remain tight through the second quarter of 2026, which could keep prices elevated in the near term.

Frequently Asked Questions: Navigating the Market Turmoil