Oil futures soared to their highest levels since July 2024 as the U.S.-Israel led war with Iran expanded beyond the Middle East, sending financial markets into turmoil. Brent crude futures jumped 4.9 percent to over $85 a barrel, while West Texas Intermediate crossed above $80 after an 8 percent gain. Both benchmarks are now at seven-month highs.

Higher oil prices are fueling inflation fears globally, hitting both stock and bond markets. The S&P 500 tumbled 0.6 percent in early trading and is now in negative territory for the year. Rising crude costs threaten to dampen the U.S. economy as higher prices at the pump and increased diesel costs get passed onto consumers and businesses.

Gasoline prices in the United States averaged over $3.25 per gallon on Thursday, with diesel hitting $4 per gallon for the first time since April 2024. The 10-year Treasury yield rose to 4.13 percent this week, reflecting inflation concerns. Nvidia, the largest company in the S&P 500, fell as much as 2.8 percent amid reports of potential government restrictions on AI chips before recovering.