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Oil prices top $90 as U.S. hits Iran in Strait of Hormuz
Brent crude rises 2.8% to $90.59 a barrel
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An Iranian national flag flies above a gas refinery in Bandar Abbas, Iran. (Ali Mohammadi/Bloomberg)
Key Takeaways:
- Oil prices surged more than 3% after the U.S. strike on Aug. 30 broke a lull in fighting in a war that has lasted more than six months.
- The national average for gasoline in August has been above $4 per gallon every day in August for the first time ever, according to the AAA.
- The war has curtailed traffic in the Strait of Hormuz, which accounts for about 20% of the world’s oil shipments.
NEW YORK — The price of oil rose and stocks fell on Wall Street on Aug. 31 after the U.S. launched its first military action in a month against Iran.
U.S. forces struck Iranian rocket launchers on the Strait of Hormuz on Aug. 30. Meanwhile, the United Arab Emirates said it intercepted an Iranian drone over its waters on Aug. 31. The aggressive actions follow a lull in activity in the U.S. war with Iran, which has lasted more than six months.
The war has curtailed traffic in the Strait of Hormuz, which accounts for about 20% of the world’s oil shipments. Oil prices remain high after an initial surge earlier in the war and that has made everything from gasoline to shipped goods more expensive.
The price of Brent crude, the international standard, rose 2.8%, to $90.59 per barrel on Monday. The price swung between $72 and $102 last month amid rising and falling hopes for a deal to end the war.
The national average for gasoline in August has been above $4 per gallon every day in August for the first time ever, according to the AAA. It has been the most expensive August at the pump on record, outpacing even the enormous supply chain crunch during the COVID-19 pandemic in August 2022.
The S&P 500 index fell 0.4%. The Dow Jones Industrial Average fell 348 points, or 0.7%, as of 9:51 a.m. Eastern time. The Nasdaq fell 0.3%.
August 31: PA Average AAA Gasoline Price Same As Yesterday To $4.21/Gallon [Up 6 Cents This Week] - $1.10/Gallon Higher Than On Feb. 27 [Warren County Average Price Again Highest at $4.39] https://t.co/RUZyRHyedj pic.twitter.com/exK7XAjc06
— PA Capitol News (@PaCapitolNews) August 31, 2026
The losses were broad, with nearly every sector within the benchmark S&P 500 losing ground. Energy stocks, though broadly gained ground. Exxon Mobil rose 2.9% and Chevron rose 3%.
Markets were mixed in Europe and Asia.
GameStop jumped 4.2% after the video game retailer provided a preliminary second-quarter earnings outlook above its year-ago results. Shares of Aon fell 5.8% as the company announced that it was buying insurance broker USI Insurance Services from private equity firm KKR in a deal valued at $17 billion, including debt.
Higher energy prices because of the war have fueled already stubbornly high inflation. That has been weighing on household spending and consumer confidence. It has also given the Federal Reserve a more complicated path ahead for its interest rate policy.
The rate of inflation remains well above 3%, which is far beyond the Fed’s 2% target. Wall Street expects the central bank to raise interest rates at least once before the year ends in an effort to cool inflation.
The yield on the two-year Treasury, which closely tracks expectations about Fed moves, remained at 4.34% from late Aug. 28. That’s up significantly, though, from about 3.50% at the beginning of 2026.
The yield on the 10-year Treasury rose to 4.76% from 4.73% late Aug. 28. That's back up around the level seen two weeks ago when the Trump administration took the unusual step of announcing it would intervene in the bond market.
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The job market remains resilient, but is showing signs of weakening. Any increase to interest rates that could cool inflation also risks hurting the jobs market.
Later this week, the U.S. reports August jobs data. In July, the U.S. job market stalled unexpectedly as employers cut 23,000 jobs. Labor Department revisions slashed another 103,000 jobs from May and June payrolls.
AP Business Writers Elaine Kurtenbach and Michelle Chapman contributed to this report.
