The fastest rise in oil in history and a fear index under 30: the results of the first week of the war

Oil prices rose sharply amid the war between the U.S. and Iran and the threat of prolonged disruption of energy supplies from the Middle East. Futures for U.S. WTI rose for five days by about 35% - this is the largest weekly growth since the beginning of trading in oil contracts in 1983, notes CNBC. All week American stocks showed strong volatility: the so-called Wall Street fear index jumped by 25% by the end of Friday and almost reached 30 points, while the alarming is considered to overcome the mark of 20.

- The S&P 500 broad market index declined 2 percent in the first week of the Iran war and suffered its biggest losses since October, Bloomberg noted, falling 1.3 percent on Friday.

- The blue-chip index Dow Jones Industrial Average has lost 3% in five trading days, its worst week in almost a year, CNBC calculated. On Friday, the Dow was down 0.9%.

- The Nasdaq Composite technology sector index fell 1.2% on the week. On March 6, it lost 1.6%.

- The Russell 2000 index of small-cap stocks fell about 4% for the week. On Friday it fell by 2.4%.

- WTI crude oil futures rose about 35% for the week, rising above $90 per barrel. This is the largest weekly increase since the beginning of trading in oil futures in 1983, notes CNBC. On Friday, WTI jumped 12%, while Brent crude added about 8%, trading above $92 a barrel and at one point was at $94.

- The dollar index, which shows its relationship to a basket of other world currencies, added 1.4% over the week. This is the largest increase since August, when the U.S. currency strengthened by 1.5%, notes CNBC.

- Gold failed to confirm its status of a protective asset - for the first time in five years it ended the week with a loss. Its value for five days fell by 1.7%. The price of silver fell by 9.6% during the week.

- Bitcoin fell in price by 4.5% on Friday, falling below the $70,000 per token level again.

- The VIX volatility index, also called the Wall Street fear indicator, remained above the psychologically important 20-point mark all week, indicating the expectation of high market volatility. On Friday, the index jumped 25% and ended the week at 29.5 points.

The rise in hydrocarbon prices is primarily due to disruptions in oil exports through the strategically important Strait of Hormuz, which provides a quarter of global supplies. The war in the Middle East has virtually paralyzed shipping in this corridor. At least three tankers are known to have been attacked by Iran this week.

The U.S. said it will insure losses of ships in the Strait of Hormuz for up to $20 billion. This mechanism should partially compensate for the growth of insurance premiums and reduce the likelihood of supply interruptions, CNBC writes. However, analysts warn that these measures may not be enough. US President Donald Trump also admitted that the country's Navy will be involved to ensure security.

The pressure on the energy market on Friday was intensified by Trump's ultimatum : he wrote on social network Truth Social that an end to the war is only possible after Iran's "unconditional surrender." The Wall Street Journal reported that Kuwait has begun cutting oil production due to a lack of storage capacity. And Qatar's energy minister warned in an interview with the Financial Times that hydrocarbon suppliers in the Gulf countries could declare force majeure and stop production altogether. In this case, he said, prices could rise to $150 per barrel.

Against the backdrop of oil price hikes and increased geopolitical risks, investors sold off primarily shares of companies sensitive to the economic cycle and fuel costs. Pressure was felt by companies from the tourism and transportation sector. Quotes of cruise operator Royal Caribbean for the week fell by 10.6%, securities of industrial giant Caterpillar, which is considered an indicator of global economic activity, lost 8.3%. Affected airlines and tour operators: German TUI lost more than 10% of capitalization, Wizz Air - 24%, Lufthansa - 10.6%, and IAG - 11.4%. United Airlines, American Airlines and Delta Air Lines lost between 10% and 14.5% over the week.

Weapons manufacturers won. Trump said Friday that U.S. defense contractors "have agreed to quadruple production of Exquisite-class weapons to reach maximum volumes as quickly as possible." In the defense industry, the term is used to refer to unique, high-tech systems or technologies, CNBC explained. Shares of Lockheed Martin, Northrop Grumman and RTX added 2.1 percent, 4.4 percent and 3.5 percent for the week, respectively.

One of the brightest beneficiaries of the week was military and civilian AI developer Palantir, thanks to contracts with the Defense Ministry. Palantir's stock rose 15%, posting its best weekly performance since August, CNBC reported .

Software stocks have started to recover after investor attention shifted from the "software apocalypse" of previous weeks to the Middle East. iShares Expanded Tech-Software Sector ETF, which tracks stocks in the sector, rose 7.9% for the week, trimming YTD losses to 17.8%

The stock market was dealt another blow Friday by labor market data for February, which showed a sharp decline in nonfarm payroll jobs compared with January - one of the largest since the pandemic, Bloomberg calculated. That was significantly worse than economists had expected.

During the week, stocks and bonds repeatedly fell simultaneously, Bloomberg notes. An inflation shock due to oil supply disruptions pushed Treasury yields up, contrary to the usual "crisis" scenario. As a result, stocks and bonds had their worst week together since Trump imposed the duties last April, and the market has not been able to decide what is the greater threat - inflation or a slowing economy, the agency says.

- "I'm very cautious [in my estimates]," Wharton School professor emeritus Jeremy Siegel told CNBC. - Unless there's some kind of breakout over the weekend, I think we'll see oil at $100 a barrel next week."

- The range of possible oil prices has "widened significantly," CNBC quoted Argent Capital Management portfolio manager Jed Ellerbrook as saying. Even if you lower Qatar's forecast of $150 a barrel by 20%, those are still "pretty darn scary" levels, he added. "If I were a trader, I wouldn't be thrilled with the idea of holding a large block of economically sensitive stocks before the weekend when there's a war with Iran and President Trump is behaving so unpredictably," Ellerbrook emphasized. - The longer this goes on, the more it will affect the behavior of the stock market".

- "War has no winners. There are only the least losers," Qu Nguyen, chief investment officer at Research Affiliates, told Bloomberg. - The only safe haven [for investors' assets] turned out to be the energy sector."

- The selloff in precious metals, Treasuries and consumer staples stocks, traditionally considered defensive assets, reflects growing market fears of stagflation, Natixis Investment Managers portfolio manager Jack Janasevich told Bloomberg. Investors fear a scenario in which rising energy prices would reignite inflation while hitting consumers' wallets, slowing economic growth. "There is a risk that this situation will drag on and everything ultimately hinges on the oil price," he warned. - "There is a possibility of an upward revision of inflation expectations, but at the same time we also need to consider the risk of demand destruction.

- "The main figure of the jobs report was very disappointing and will reinforce concerns that the labor market - despite a strong January jobs report - is starting to weaken," Orion Chief Investment Officer Tim Holland told CNBC. - With the recent rise in energy prices, Wall Street may once again be talking about stagflation - that toxic mix of slowing economic growth and accelerating inflation that characterized the 1970s."

This article was AI-translated and verified by a human editor