Contracts for the S&P 500 Index were down 0.8% while a gauge of Asian shares dropped as much as 1.1% in early trading. Treasury yields rose. Oil gained for a second day as escalating rhetoric over the Iran war raised concerns over a prolonged conflict, outweighing an emergency release of crude reserves by wealthy nations.

Energy markets remained the biggest focus for investors as volatility in oil and gas prices continues to feed into inflation expectations. US equities ended little changed Wednesday while Treasuries fell across the curve even as data showed inflation slowed in February from a month earlier. That reflected concern that the Iran war, which has boosted energy costs, is complicating the Federal Reserve’s path on interest rates. Traders now anticipate the Fed will cut rates only once this year.

“Despite the prospect of releasing oil reserves, continued uncertainty translates into continued upside risk for oil prices, and that translates into a Fed that will remain cautious about cutting interest rates,” said Ellen Zentner at Morgan Stanley Wealth Management.

There has been no break in the conflict overnight in the Middle East, with strikes hitting energy infrastructure. Iraq’s oil ports have completely stopped operations, according to the state-run Iraqi News agency, as two tankers were attacked.

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The US plans to release 172 million barrels from its emergency oil reserve as nations around the world work to ease surging crude and fuel prices. That’s part of the plan by member countries of the International Energy Agency to discharge 400 million barrels from reserves globally, its largest-ever release.
President Donald Trump said the massive release of emergency oil reserves approved by the IEA would ease energy price pressures while the US seeks to “finish the job” in its campaign against Iran. Iran has told regional intermediaries that for a ceasefire, the US must guarantee neither it nor Israel will strike the country in the future, according to officials familiar with the matter.Separately, Trump is preparing to invoke powers that would permit renewed oil production off the southern California coast. Trump said he didn’t believe Iran was laying mines in the Strait of Hormuz and repeated his suggestion the war would end soon.

Meanwhile, Morgan Stanley capped redemptions from one of its private credit funds, returning less than half of the capital that investors sought to cash out. That added to a wave of redemption requests in the industry amid growing concerns over the quality of loans.

Changing Path

In Asia, the yen touched its weakest level against the greenback since January. After holding policy settings steady next week, the Bank of Japan will likely raise its benchmark interest rate in April, according to more than a third of surveyed economists.

The S&P 500 declined 0.1% on Wednesday, while the Nasdaq 100 was flat.

Data out Friday will likely paint a picture of more stubborn inflation. Economists see the Fed’s favored core personal consumption expenditures price index up 0.4% again in January. Compared with the same month last year, the median forecast calls for a 3.1% increase.

“February’s inflation numbers were heading in the right direction, but then along came the conflict in the Middle East, and now the path is changing,” said Brian Jacobsen at Annex Wealth Management.

While investors are far more focused on how the conflict in Iran feeds into inflation over the months ahead, the latest data offers some reassurance that price pressures were not moving in the wrong direction before the recent energy shock, said Seema Shah at Principal Asset Management.

“The Fed has historically looked through energy‑driven price spikes,” she noted. “But with inflation having sat above target for almost five years, it may be harder to do so this time.”

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Iran warned the United States on Wednesday that oil prices could soar to $200 a barrel as escalating U.S. and Israeli strikes against the country continue to rattle global energy markets. 

To prevent what could be one of the worst oil shocks since the 1970s, the U.S. announced that Washington, along with the International Energy Agency (IEA), will soon release a historic volume of oil from its emergency reserves.

If oil prices reach such levels, average gas prices in the United States could surpass $5 a gallon, analysts predict. As of Wednesday, the national average price for regular gasoline stands at $3.57 per gallon, according to the American Automobile Association.

A spokesperson for Iran’s primary military command issued the warning in comments addressed to Washington, Reuters reported. Tehran reportedly emphasized that the instability in global oil markets was the result of what Tehran describes as conditions imposed by the United States and Israel. 

“Get ready for oil to be $200 a barrel, because the oil price depends on regional security, which you have destabilized,” Ebrahim Zolfaqari, spokesperson for Khatam al-Anbiya Central Headquarters, said.

GAS PRICES SURGE, PINCHING AMERICANS AND HANDING THE GOP A NEW MIDTERM HEADACHE

A customer pumps gasoline into his car. (Justin Sullivan/Getty Images / Getty Images)

The threat of $200-a-barrel oil comes after crude prices recently surged past $100 for the first time since 2022, peaking at nearly $120 a barrel before settling around $90 on Wednesday due to a brief relief rally. West Texas Intermediate, the crude oil produced in the United States, was trading at just under $86 a barrel.

In response, the IEA, made up of major oil-consuming nations, agreed to release 400 million barrels from its global strategic reserves, though experts warn this would replace only a fraction of the supply normally flowing through the Strait of Hormuz.

The United States will add another 172 million barrels from its own Strategic Petroleum Reserve starting next week, according to U.S. Secretary of Energy Chris Wright. 

“Earlier today, 32 member nations of the International Energy Agency unanimously agreed to President Trump’s request to lower energy prices with a coordinated release of 400 million barrels of oil and refined products from their respective reserves,” Wright said in a statement.

TRAVEL IS ABOUT TO GET MORE EXPENSIVE AS IRAN CONFLICT SPARKS JET FUEL CRUNCH

President Donald Trump on Wednesday recommended releasing 172 million barrels of oil from U.S. reserves. (Al Drago/Getty Images / Getty Images)

“As part of this effort, President Trump authorized the Department of Energy to release 172 million barrels from the Strategic Petroleum Reserve, beginning next week. This will take approximately 120 days to deliver based on planned discharge rates.”

The energy secretary added that the Trump administration has arranged to replenish the U.S. Strategic Petroleum Reserves with roughly 200 million barrels over the next year, roughly 20% more than the amount being drawn down, at no cost to taxpayers.

“For 47 years, Iran and its terrorist proxies have been intent on killing Americans,” he said. “They have manipulated and threatened the energy security of America and its allies. Under President Trump, those days are coming to an end. Rest assured, America’s energy security is as strong as ever.”

THE UNLIKELY TOOL TRUMP IS EYEING TO TACKLE RISING OIL PRICES AMID THE IRAN CONFLICT

The Thailand-flagged cargo ship Mayuree Naree engulfed in black smoke in the Strait of Hormuz, March 11, 2026. (Royal Thai Navy/Handout via REUTERS  / Reuters Photos)

IEA nations have released emergency oil stocks on only five previous occasions, including the 1990–1991 Gulf War, Hurricane Katrina in 2005, the Libyan civil war in 2011, and twice following Russia’s invasion of Ukraine.

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Iran further warned on Wednesday that any ships belonging to the United States, Israel or their allies would be targeted if they pass through the Strait of Hormuz, the strategic channel that typically transports about a fifth of the world’s oil supply.

“Any vessel whose oil cargo or the vessel itself belongs to the United States, the Zionist regime or their hostile allies will be considered legitimate targets,” Al-Anbiya said in a statement carried by state TV, according to Arab News.

The comments highlight Iran’s maritime attacks in the past week and reported deployment of naval mines in the region. At least 14 merchant ships have been hit since the conflict began. 

Reuters contributed to this report.