Oil prices surged to their highest levels in five months and U.S. stocks tumbled Thursday after the United States ordered non-emergency diplomats and their families to leave Saudi Arabia, warning that fighting between the kingdom and Yemen’s Houthi rebels “has the potential to escalate rapidly.”
Brent crude, the global benchmark, rose more than 3% to about $112.30 a barrel in Thursday morning trade, while U.S. benchmark West Texas Intermediate climbed nearly 3% toward $100 a barrel. Shortly after the open, the Dow Jones Industrial Average fell 0.4%, the S&P 500 dropped 0.8%, and the tech-heavy Nasdaq composite tumbled 1.4%.
The State Department order followed a deadly Wednesday. Saudi Arabia’s civil aviation authority said one person was killed and eight injured in an attack on King Fahd International Airport in Dammam; separately, debris from a drone intercepted while targeting the Shaybah oil field killed two people and injured two more, Saudi authorities said.
State Department spokesperson Tommy Pigott said the Houthis had “increasingly targeted civilian airports and other critical infrastructure, causing civilian casualties and severe travel disruptions.” “The safety and security of department personnel and their families remain our highest priority,” he added.
The escalation also rattled markets on reports that the U.S. and Israel are drawing up plans for renewed strikes on Iran after next month’s U.S. midterm elections on Nov. 3. Iran’s Revolutionary Guard Navy said four vessels involved in what it called illegal oil transfers were hit and caught fire, and Iranian media reported explosions of unknown origin in Sirik in southern Iran.
Safe-haven rush sends bond yields down
As investors fled risk, money poured into U.S. government bonds. The yield on the 10-year Treasury note fell about 10 basis points to roughly 5.03% — the lowest in nearly a month. Bond yields move opposite to prices.
Meta shares were set to fall 1.5% and Tesla 5% at the opening bell after mixed earnings raised fresh doubts about artificial-intelligence spending, dragging tech lower.
Across the Gulf, major stock markets fell in early trade. Saudi Arabia’s benchmark index dropped 1.2%, poised for an eighth weekly decline, with oil giant Saudi Aramco down 0.5%. Dubai’s main index fell 0.8%, Abu Dhabi 0.5% and Qatar 0.8%.
What it means for your money
When crude jumps this fast, gasoline prices usually follow within days to weeks — bad timing for drivers already paying elevated prices. For borrowers, the silver lining is the drop in Treasury yields: mortgage and loan rates track those yields, and the 10-year has now fallen from a multi-year high of 5.31% less than two weeks ago to about 5.03%. For savers and retirement accounts, Thursday’s stock slide is another dent — though the Nasdaq had recouped much of last week’s losses before Thursday’s open.
Sources: Reuters; The Wall Street Journal; Investopedia; Investor’s Business Daily; Barron’s; MarketWatch.
