Crude oil breaks $100, US stock futures plummet, VIX fear index soars! Analysts warn: the worst period in the market has not yet arrived

FinancialAPP learned that due to escalating hostilities in the Middle East, oil transportation and infrastructure are under increasing pressure. Global investors are worried about future market turbulence. On Monday, crude oil futures prices rose over $100 per barrel, with spot prices surpassing $110. U.S. stock index futures declined. Amid a strong dollar and inflation risks, gold prices fell to around $5,120 per ounce in early trading after posting their first weekly decline in over a month. The U.S. dollar index rose 0.4%.

Last week, WTI crude oil prices increased about 19%, reaching around $108 per barrel, after a 36% gain the previous week. As the Iran conflict enters its second week, the oil market faces further risks of turmoil this week, with major oil producers cutting output, storage centers nearing capacity, and traffic through the Strait of Hormuz effectively disrupted.

On Monday, U.S. stock index futures fell 1.5%, and Asian markets also appeared to be heading lower. The dollar strengthened against all G10 currencies. Driven by rising oil prices and inflation expectations, the Australian 3-year government bond yield surged to its highest level since July 2011.

Roundhill Financial CEO Dave Mazza said, “This is no longer just about the Strait of Hormuz being effectively closed, but about supply chain disruptions spreading deeper into the region. This shift could cause already uneasy investors to further reduce risk exposure.”

Last week, worsening geopolitical tensions added new pressure to markets already strained by concerns over AI disruption and potential cracks in credit markets, triggering a sell-off across regions and asset classes. The escalating crisis leaves investors torn: on one side, high oil prices risk fueling new inflation; on the other, signs of a cooling U.S. labor market could reinforce the need for monetary easing.

On Sunday, Iran increased attacks on neighboring Middle Eastern countries, while Israel struck fuel depots in Tehran and threatened Iran’s power grid. U.S. President Trump warned that the U.S. might consider strikes on regions not previously targeted. He posted on social media that the attacks would continue “until they surrender, or more likely, collapse completely!”

The Chicago Board Options Exchange Volatility Index (VIX), which measures implied volatility of the S&P 500, surged near 30 last Friday, pushing spot prices above their three-month futures—marking the largest backwardation in nearly a year.

JonesTrading Chief Market Strategist Michael O’Rourke said, “The worst period of market reaction has yet to come. Until we see some tangible good news, I expect risk aversion to intensify.”

Meanwhile, U.S. data released last Friday showed non-farm payrolls decreased by 92,000 last month, one of the largest declines since the pandemic outbreak. While some of the decline was within expectations, such as temporary impacts from healthcare strikes and adverse weather, layoffs occurred across various industries. The unemployment rate rose to 4.4%.