Crude Prices Rise, Dow Falls Over Concern About Oil Supply

Oil prices leaped, and stocks slumped Friday on worries that escalating violence following Israel's attack on Iranian nuclear and military targets could damage the flow of crude around the world, along with the global economy.

• The S&P 500 fell 68.29 points to 5,976.97.
• The Dow dropped 769.83 points to 42,197.79.
• The Nasdaq sank 255.66 to 19,406.83.

The strongest action was in the oil market, where the price of a barrel of benchmark US crude jumped 7.3% to $72.98. Brent crude, the international standard, rose 7% to $74.23 for a barrel.

Iran is one of the world's major producers of oil, though sanctions by Western countries have limited its sales. If a wider war erupts, the AP reports, it could slow the flow of Iran's oil to its customers and keep the price of crude and gasoline higher for everyone worldwide. Beyond the oil coming from Iran, analysts pointed to the potential for disruptions in the Strait of Hormuz, a relatively narrow waterway off Iran's coast. Much of the world's oil that's been pulled from the ground moves through it on ships. For now, the price of oil has jumped, but it's still lower than it was earlier this year. "This is an economic shock that nobody really needs, but it is one that seems more like a shock to sentiment than to the fundamentals of the economy," said Brian Jacobsen, chief economist at Annex Wealth Management.

Companies that use a lot of fuel as part of their business and need their customers feeling confident enough to travel had some of the sharpest losses. Cruise operator Carnival dropped 4.9%. United Airlines sank 4.4%, and Norwegian Cruise Line Holdings fell 5%. They helped overshadow gains for US oil producers and other companies that could benefit from increased fighting between Israel and Iran. Exxon Mobil rose 2.2%, and ConocoPhillips gained 2.4% because the leaping price of crude portends bigger profits for them. Contractors that make weapons and defense equipment also rallied. Lockheed Martin, Northrop Grumman, and RTX all rose more than 3%. (More Wall Street stories.)