Oil prices rebound as pause in Iran war shatters

This satellite image provided by Planet Labs PBC on July 27 shows smoke rising from the Saudi Aramco oil processing facility in Abqaiq, Saudi Arabia. (Planet Labs PBC via AP)

NEW YORK — Oil prices are back to jumping July 29 after Jordan and the U.S. knocked down another Iranian missile barrage launched against American forces in the Middle East.

The U.S. stock market is holding relatively steady ahead of a Federal Reserve decision on what to do with interest rates.

READ MORE: U.S., Iran remain deadlocked over Strait of Hormuz

The S&P 500 slipped 0.1%. The Dow Jones Industrial Average was down 458 points, or 0.9%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.1% higher.

Oil prices — which had eased from last week's the two-month high — rebounded as a brief pause in fighting in the Iran war was shattered. Jordan’s air defenses intercepted five missiles launched from Iran early July 29, the country’s military said, hours after the U.S. military said it had knocked down an Iranian missile barrage.

The calm persisted for about three days following weeks of escalation over the strategic Strait of Hormuz, the Persian Gulf waterway and narrow chokepoint through which 20% of the world’s traded oil normally flows.

The price of Brent crude leaped 7.2% to $88.03 per barrel.

At 5:45 p.m. ET today, Islamic Revolutionary Guard Corps forces launched multiple ballistic missiles from Iran in an attempted surprise attack on U.S. forces based in the Middle East. All Iranian missiles were successfully intercepted. U.S. forces remain vigilant and at a high… — U.S. Central Command (@CENTCOM) July 28, 2026

Brent oil’s price had swung as low as $72 early this month and as high as $102 last week on uncertainty about whether the United States and Iran could reach a deal to allow oil tankers to move freely again from the Middle East to customers worldwide.

The swings have raised worries that inflation could reaccelerate, just when it had begun to slow more than economists expected. That in turn has traders uncertain about what the Federal Reserve will announce after its two-day meeting on interest rates concludes later in the day.

Traders are betting on a roughly 36% probability that the Fed will raise its main interest rate, which would be the first increase in three years. Higher rates can keep a lid on inflation, but they can also slow the economy and undercut prices for stocks and other investments.

Higher rates can particularly hurt stocks that are seen as the most expensive, and scrutiny has already been rising on makers of computer chips and other winners whose prices have soared because of the frenzy around artificial intelligence technology. Their rises are backed with real growth, but it may not be sustainable if AI does not produce as much profit and productivity as hoped.

Traffic rises, risks persist

Daily monitoring shows stronger transit volumes across the Strait of Hormuz and Bab el-Mandeb, with 12 and 41 confirmed crossings respectively on 28 July. Yet higher traffic should not be mistaken for lower risk. Hormuz routing remains concentrated… pic.twitter.com/fwUxZyUaf8 — Kpler (@Kpler) July 29, 2026

The skepticism hit South Korea’s stock market in particular because it’s dominated by two tech giants, Samsung Electronics and SK Hynix. Seoul’s Kospi index tumbled 6%, a day after it plunged 10.8%, and trimmed its gain for the year so far to 34.4%.

SK Hynix’s stock in Seoul dropped 9.6%. It reported record amounts of revenue and profit for a quarter thanks to strong demand because of AI. But its 257% growth in revenue still wasn’t enough to meet analysts’ expectations.

Stocks were mixed elsewhere in the world, with Hong Kong’s Hang Seng rising 2% but France’s CAC 40 falling 0.7%.

In the bond market, Treasury yields edged up as oil prices rose. The yield on the 10-year Treasury climbed to 4.62% from 4.61% late July 28.

AP Business Writers Yuri Kageyama and Matt Ott contributed to this report.