Oil Prices Have Skyrocketed 66% Since the Iran War Began -- Is a Stock Market Crash Next?

By Sean Williams – Mar 8, 2026 at 9:36PM ESTKey PointsWest Texas Intermediate crude oil futures have spiked 66% in a little over one week, reaching as high as $111 per barrel, following the start of military actions against Iran.Historically, parabolic moves in oil prices have correlated with weaker consumer spending, higher inflation, and rising unemployment.Although geopolitical events involving energy supply disruptions haven't been kind to equities over short periods throughout history, the foundation of the American economy and stock market remains intact.For the better part of the last 17 years, the Dow Jones Industrial Average (^DJI 0.95%), S&P 500 (^GSPC 1.33%), and Nasdaq Composite (^IXIC 1.59%) have been motoring higher. All three indexes performed particularly well during President Donald Trump's first, non-consecutive term in the Oval Office, with respective gains of 57%, 70%, and 142% for the Dow, S&P 500, and Nasdaq. However, Wall Street's major indexes may be cracking due to the Iran war. President Trump overseeing Operation Epic Fury. Image source: Official White House Photo by Daniel Torok. A historic surge in oil prices has the stock market on edge On Feb. 28, U.S. and Israeli armed forces commenced military operations against Iran. Following these actions, Iran has virtually closed the Strait of Hormuz to oil exports. Approximately 20% of the daily petroleum liquid used globally passes through the Strait of Hormuz. In just a shade over one week, the April contract for West Texas Intermediate crude oil surged from a close of $67.02 per barrel (Feb. 27) to an intra-day peak of $111.24 per barrel on Sunday, March 8, representing a 66% increase. It's the fastest surge in oil prices observed in more than 40 years. Crude oil hits a high of $111.24 (+22.3%) after its reopen, before trimming gains to be trading 19.12% higher at $108.70. pic.twitter.com/Czqxa34CG1 -- Tony Sycamore_IG (@Tony_Sycamore) March 8, 2026 While most folks are likely seeing the tangible impact of higher crude oil prices at the gas pump, there are far bigger implications for the U.S. economy and stock market. Historically, parabolic moves in the spot price of oil have correlated with periods of weaker consumer spending, higher inflation, and rising unemployment. Inflation is, arguably, the bigger concern.

The Federal Reserve is in the midst of a rate-easing cycle, and the prospect of lower interest rates has been powering a historically expensive stock market higher. This surge in oil prices may completely remove any chance of a rate cut in 2026. Image source: Getty Images. The million-dollar question: Will the stock market crash? But can a historic move in oil prices lead to an equally jaw-dropping move lower in the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite? On the day the Iran War began, Carson Group's Chief Market Strategist, Ryan Detrick, published a data set on X (formerly Twitter) that outlined the performance of the S&P 500 following more than 40 major geopolitical events since 1940. On the one hand, Detrick's data set shows that the S&P 500 was higher 65% of the time one year after a major geopolitical event. Although the average one-year return was only 3% (well below the stock market's long-term average annual return), it points to the long-term resiliency of public companies. Here's a list of major geopolitical events since WWII. Up a median of 5% six months later. All of them felt really bad at the time. pic.twitter.com/Jb3QXL0L05 -- Ryan Detrick, CMT (@RyanDetrick) February 28, 2026 Conversely, the events that did lead to significant downturns and/or stock market crashes often had one thing in common: energy supply disruption. The oil embargo of 1973 and Iraq's invasion of Kuwait in 1990 both led to short-term tumbles in the benchmark S&P 500. Although past correlations can't guarantee future short-term directional moves in Wall Street's major indexes, the historical precedent for a brief elevator-down move is there. However, this isn't an event that investors should panic over. Despite witnessing a historic move in oil prices, the foundation of the U.S. economy and corporate America remains intact. There's a reason the S&P 500 has never generated a negative total return, including dividends, over any rolling 20-year period.Read NextMar 8, 2026 •By Adria CiminoJerome Powell's Warning to Wall Street is Ringing Out Loud and Clear.

History Says This May Happen Next.Mar 8, 2026 •By Sean WilliamsThe Iran War Is Heightening Stock Market Volatility -- but This $7.8 Trillion Figure Is an Objectively Bigger Worry for Wall StreetMar 8, 2026 •By Sean WilliamsPrediction: The Trump Bull Market Will Soon End -- and More Than 150 Years of Historical Precedent Explains WhyMar 8, 2026 •By Trevor JennewineThe Stock Market Drops as Oil Prices Flash a Warning Last Seen in 2022.

History Says This Will Happen Next.Mar 7, 2026 •By Sean WilliamsA Federal Reserve Double Whammy Is 2 Months Away -- and It May Mark the Tipping Point for the Stock MarketMar 7, 2026 •By Sean WilliamsMove Over, Tariffs! If a Stock Market Crash Takes Shape Under President Donald Trump, These 2 Factors Are Likely the Cause.About the AuthorSean Williams is a data-driven Motley Fool contributing analyst who's been investing for 27 years and has penned north of 15,000 articles. You'll find him at the intersection of politics and investing tackling macroeconomic topics of interest (Social Security and Donald Trump's economic/tax policies), analyzing which stocks billionaire investors (e.g., Warren Buffett) are buying and selling, and digging into how the world's most-influential businesses and trends -- everything from the evolution of artificial intelligence (AI) to the next stock split -- are changing Wall Street. He holds a B.A. in Economics from the University of California, San Diego.TMFUltraLongX@AMCScamStocks MentionedS&P 500 IndexSNPINDEX: ^GSPC$6,740.02(-1.33%)-$90.69Dow Jones Industrial AverageDJINDICES: ^DJI$47,501.55(-0.95%)-$453.19NASDAQ Composite IndexNASDAQINDEX: ^IXIC$22,387.68(-1.59%)-$361.31*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.