Breaking! Iran: Hits U.S. aircraft carrier! Crude oil surges, Dow Jones plunges over 1,100 points!

The Middle East conflict continues to roil financial markets.

As the conflict involving Iran continues to escalate and spills over beyond the Middle East, overnight U.S. stock markets saw violent swings. The Dow fell by more than 1,100 points at one point during the day. International oil prices surged sharply. WTI April crude oil futures finished up more than 8%, logging the biggest single-day gain since May 2020.

As for the situation, according to a report by CCTV News, on March 5 local time, a spokesperson for the Central Command of the Iranian Armed Forces Hartam Anbia said that in the Sea of Oman, 340 kilometers from the border of Iranian waters, the U.S. aircraft carrier “Abraham Lincoln” was hit by an Iranian Islamic Revolutionary Guard Corps naval drone. The Israeli Defense Forces announced that day that the Israeli Air Force launched a new round of airstrikes on targets in Tehran, Iran’s capital.

Dow plunges sharply

On March 6, U.S. Eastern Time, all three major U.S. stock indexes fell across the board. The Dow fell by more than 1,100 points at one point during the day, and ultimately closed down 1.61%. The Nasdaq closed down 0.26%, and the S&P 500 index fell 0.57%.

Major U.S. technology stocks were mixed. Broadcom surged by more than 4%, Microsoft rose by more than 1%, Amazon rose by nearly 1%, and Nvidia closed slightly higher. Meta fell by more than 1%, while Apple, Google, and Tesla closed slightly lower.

As for oil prices, WTI April crude oil futures jumped 8.5%, rising to more than $81 per barrel, the biggest single-day gain since May 2020. WTI April crude oil futures rose 4.93%, to $85.41 per barrel.

Since the beginning of this week, WTI crude and Brent crude prices have each risen by more than 20% and 17%, respectively. Market concerns about disruptions to oil transportation through the Strait of Hormuz have continued to intensify.

The data shows that, due to the escalation of the conflict, the war appears to have completely halted tankers from sailing through the Strait of Hormuz. However, on March 5 local time, Iran’s Permanent Mission to the United Nations posted on social media saying that claims of an “Iranian blockade” of the Strait of Hormuz are groundless and utterly absurd. Iran has always abided by international law and safeguards freedom of navigation.

Meanwhile, U.S. natural gas futures rose by nearly 3%, and diesel futures rose by about 7%. Higher energy prices could fuel inflation, making the Federal Reserve’s policy outlook even more complex—and also adding pressure to the stock market.

Lee Hardman, a senior foreign exchange economist at Mitsubishi UFJ Financial Group, said in a report: “Uncertainty about the current situation remains very high. The market is still unable to gauge how long the conflict will last, and to what extent global energy supply will be impacted.”

Rob Haworth, head of senior investment strategy at Bank of America, said that the core issues the market is focusing on include: first, whether shipping through the Strait of Hormuz can resume; and second, how long the war will last. The market has long been hoping that this conflict will be short-lived. But the scope of the conflict has kept expanding. If the war lasts longer and the impact spreads further, the sentiment for risk assets could deteriorate noticeably.

Iran’s military: Hit the U.S. “Lincoln” aircraft carrier

In the early hours of March 6, Beijing time, according to a report by CCTV News, on March 5 local time, a spokesperson for the Hartam Anbia Central Command of the Iranian Armed Forces said that the U.S. aircraft carrier “Abraham Lincoln,” in the Sea of Oman 340 kilometers from the border of Iranian waters, was hit by an Iranian Islamic Revolutionary Guard Corps naval drone. The “Abraham Lincoln” aircraft carrier and its destroyers rapidly withdrew, and have already moved more than one thousand kilometers away from the area.

The Islamic Revolutionary Guard Corps announced that the 21st round of the “True Promise 4” counteroffensive operation has been launched. Combining joint strikes using missiles and drones, it launched the “Kheybar Shekan” ballistic missile to attack targets located in the center of Tel Aviv.

At the same time, Israel carried out another round of strikes. On March 5 local time, the Israeli Defense Forces announced that the Israeli Air Force had launched another round of airstrikes on targets in Tehran, Iran’s capital. The Israeli side said this was the 13th airstrike on Tehran since the start of this round of conflict, and also the second airstrike of the day.

That evening, the Chief of the General Staff of the Israeli Defense Forces, Zamir, said at a press conference that the Israeli military is moving into the next phase of operations, and it will intensify damage to the foundations of Iran’s ruling system and its military capabilities.

It is worth noting that the spillover of the conflict is driving heightened regional tensions. On March 5, the United Arab Emirates’ Abu Dhabi was attacked again. The UAE’s National Emergency Crisis and Disaster Management Department said that air defense systems are currently responding to the missile threat.

On March 5, Azerbaijani President Aliyev convened a meeting of the Security Council. At the meeting, Aliyev said that Iran carried out a terrorist attack on Azerbaijan using drones, and that he has ordered the armed forces to formulate and implement retaliatory measures.

According to official reports from Bahrain, on March 5 a facility at one of the main refineries of Bahrain National Oil Company was hit by an Iranian missile, causing a fire. The report said that the fire has now been completely brought under control and there have been no reports of casualties; the refinery’s production and operations continue. Assessments of the relevant damage are underway.

On March 5, Qatar’s Ministry of Defense issued a press release saying that the country was attacked by missiles that day. On that day, residents in Doha, Qatar’s capital, heard a huge explosion. Later, the Ministry of Interior issued a nationwide security alert, saying that the country raised its security level.