TLDR
- Three ships were hit by suspected projectiles in the Strait of Hormuz and Persian Gulf on Wednesday
- Oil prices rose over 3% on Wednesday after crashing 12% the day before following a deleted US Navy post
- S&P 500, Nasdaq, and Dow futures all slipped slightly Wednesday morning
- The IEA proposed its largest-ever oil reserve release to ease supply pressure
- February’s Consumer Price Index report is due Wednesday at 8:30 a.m. ET
US stock futures pulled back on Wednesday as investors watched the ongoing Iran conflict and waited for key inflation data.
Futures on the S&P 500 and Nasdaq 100 each fell around 0.1% to 0.2% in early trading. Dow Jones futures also dropped slightly after stocks closed nearly flat on Tuesday.
Oil prices were back on the rise Wednesday after a dramatic swing the day before. West Texas Intermediate crude was up 3.4% at $86.43 a barrel, and Brent crude was up 2.7% at $90.25 a barrel.
The reversal followed a wild Tuesday session. Oil had briefly approached $120 a barrel on Monday before crashing 12% on Tuesday — its steepest single-day drop in four years.
That crash came after a social media post from US Energy Secretary Chris Wright claimed the Navy had escorted an oil tanker through the Strait of Hormuz. The post was later deleted, and US officials confirmed the military is not currently escorting commercial ships through the waterway.
The UK Navy said Wednesday that three vessels were struck by suspected projectiles in the region. The targets included a cargo ship in the Strait of Hormuz off Oman, a container vessel west of Ras Al-Khaimah, and a bulk carrier northwest of Dubai.
A fire on board the cargo ship was extinguished and no environmental damage was reported. A skeleton crew remained on board.
Oil Supply Response Takes Shape
Saudi Aramco said it is rerouting crude exports to the Red Sea port of Yanbu, using its East-West pipeline to bypass the Strait of Hormuz entirely.
The International Energy Agency has proposed releasing more oil from reserves than it did in 2022 during the Russia-Ukraine conflict, when 182 million barrels were released. That would be the largest such release in the IEA’s history.
Deutsche Bank analyst Jim Reid said markets are still being driven by news flow around Iran and oil supply. He described the overall tone as “cautiously more optimistic,” though he noted there is little sign the conflict will end soon.
Inflation Data Could Shift Fed Expectations
Beyond oil, Wall Street is watching closely for the February Consumer Price Index report, due at 8:30 a.m. ET Wednesday. Analysts expect price increases to match January’s 2.4% pace, with the core reading coming in around 2.5%.
Friday’s Personal Consumption Expenditures index for January will follow.
The data is expected to shape expectations around Federal Reserve policy, especially as some recent labor market indicators have shown signs of slowing.
In earnings, Oracle shares jumped after the company posted strong results and a positive outlook. Adobe and Dollar General are scheduled to report Thursday.
The 10-year Treasury yield stood at 4.156% Wednesday morning, slightly lower than the previous day.
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