Oil prices retreated and stocks climbed Monday as Iran retaliated in a limited fashion against the U.S., easing fears that the conflict in the Middle East would roil energy markets.

U.S. crude oil futures tumbled 7.2% after Iran launched missiles at a U.S. base in Qatar and at Iraq, with no casualties reported. The drop was a sharp reversal from Sunday night, when oil initially rose as much as 6% in response to the U.S. bombing of Iran’s nuclear sites over the weekend. President Trump’s decision to bomb Iran had raised fears that Tehran might retaliate by attacking critical energy infrastructure.

“The retaliation seems to be very measured,” said Jason Pride, chief of investment strategy and research at Glenmede. While the situation could change quickly, he added, Iran’s missile salvo seemed “very coordinated and intended to make it appear that Iran is not escalating.”

For more on the day in markets, see a full roundup here or listen to WSJ Minute Briefing’s latest podcast.

Before the Iranian retaliation , President Trump posted about crude prices on social media. “EVERYONE, KEEP OIL PRICES DOWN,” Trump said on Truth Social on Monday morning. “I’M WATCHING! YOU’RE PLAYING RIGHT INTO THE HANDS OF THE ENEMY.”

One explanation for the limited reaction to the Iran news is markets have already priced in a high degree of uncertainty about the Middle East: benchmark Brent crude futures settled at around $77 late Friday, up from below $70 before Israel first struck Iran.

Major U.S. stock indexes rose on news of the Iranian missile launch, after wobbling between small gains and losses in the morning. The S&P 500 ended the day with a gain of nearly 1%.

Meanwhile, Treasury yields fell after Federal Reserve governor Michelle Bowman said Monday she could support a July interest-rate cut. Following similarly dovish remarks last week from another Fed governor, Christopher Waller, Bowman’s comments were a sign that support is building for a looser monetary stance.

Futures prices now imply a 22.7% chance of a rate cut next month, up from 14.5% Friday, according to CME Group’s FedWatch tool.

As of late Monday:

The S&P 500 rose just under 1%, while both the Dow industrials and the tech-heavy Nasdaq Composite advanced 0.9%. The 10-year Treasury yield fell to 4.321%. The WSJ Dollar Index, which measures the dollar against a basket of currencies, slipped 0.2% from Friday. The price of gold, a traditional haven asset, ticked up 0.3%. Tesla surged 8.2% after the EV maker launched its long-awaited robotaxis over the weekend. Northern Trust jumped 8% after the Journal reported that Bank of New York Mellon approached its smaller rival regarding a potential merger. Shares of Hims & Hers Health plummeted 35% after Novo Nordisk terminated its partnership with the telehealth company, citing concerns about its marketing practices. U.S.-listed shares of Novo Nordisk fell 5.5%.

US stocks closed near session highs on Monday while oil prices tanked after Iran launched missiles at a US air base in Qatar in what appeared to be a limited retaliation for US strikes against Iranian nuclear sites.

The Dow Jones Industrial Average (^DJI) rose 0.9%. The S&P 500 (^GSPC) snapped a three-day losing streak to gain around 1%, and the tech-heavy Nasdaq (^IXIC) also rose almost 1%.

Oil prices fell as investors assessed the extent of Iran’s retaliation. Brent crude (BZ=F) futures fell 7% to settle at $71.48 per barrel, while WTI (CL=F) closed at $68.51 per barrel.

Iran said its retaliatory act matched the number of bombs the US dropped on its nuclear sites this weekend, in a move analysts said pointed to deescalation. Qatar said the strike did not cause any casualties.

President Trump said the move suggested Iran had “gotten it all out of their ‘system,’ and there will, hopefully, be no further HATE.” He also thanked Iran for “giving us early notice,” and said he would encourage both Iran and Israel to seek peace.

That provided a jolt to stocks, which started the session in red territory as oil surged on the immediate heels of President Trump’s decision to join Israel’s attacks on Iran on Saturday. Investors began the session on edge over a shock surge in energy prices if Iran blocks the key Strait of Hormuz waterway, as that would have repercussions for economies worldwide.

Trump said late Saturday that the US had struck Iran’s three main nuclear enrichment facilities, saying the sites had been “totally obliterated” — a claim that has since been questioned. He threatened Iran with more attacks if the country did not quickly seek peace talks.

Stocks moved into positive territory earlier in the session after Federal Reserve governor Michelle Bowman expressed support for a rate cut “as soon” as July, becoming the second central bank policymaker to be that explicit in recent days about an easing of monetary policy in the near term.

Fed Chair Jerome Powell is on Capitol Hill tomorrow for the first of two days of congressional testimony.

LIVE COVERAGE IS OVER

27 updates

US stocks closed near session highs on Monday while oil prices tanked after Iran launched missiles at a US air base in Qatar in what appeared to be a limited retaliation for US strikes against Iranian nuclear sites.

The Dow Jones Industrial Average (^DJI) rose 0.9%. The S&P 500 (^GSPC) snapped a three-day losing streak to gain around 1%, and the tech-heavy Nasdaq (^IXIC) also rose almost 1%.

Oil prices fell as investors assessed the extent of Iran’s retaliation. Brent crude (BZ=F) futures fell 7% to settle at $71.48 per barrel, while WTI (CL=F) closed at $68.51 per barrel.

Iran said its retaliatory act matched the number of bombs the US dropped on its nuclear sites this weekend, in a move analysts said pointed to deescalation. Qatar said the strike did not cause any casualties.

President Trump said the move suggested Iran had “gotten it all out of their ‘system,’ and there will, hopefully, be no further HATE.” He also thanked Iran for “giving us early notice,” and said he would encourage both Iran and Israel to seek peace.

That provided a jolt to stocks, which started the session in red territory as oil surged on the immediate heels of President Trump’s decision to join Israel’s attacks on Iran on Saturday. Investors began the session on edge over a shock surge in energy prices if Iran blocks the key Strait of Hormuz waterway, as that would have repercussions for economies worldwide.

Trump said late Saturday that the US had struck Iran’s three main nuclear enrichment facilities, saying the sites had been “totally obliterated” — a claim that has since been questioned. He threatened Iran with more attacks if the country did not quickly seek peace talks.

Stocks moved into positive territory earlier in the session after Federal Reserve governor Michelle Bowman expressed support for a rate cut “as soon” as July, becoming the second central bank policymaker to be that explicit in recent days about an easing of monetary policy in the near term.

Fed Chair Jerome Powell is on Capitol Hill tomorrow for the first of two days of congressional testimony.

LIVE COVERAGE IS OVER

27 updates

Oil prices plunged to the lowest level in a week on Monday night as Iran launched a missile strike on a US military base in Qatar.

Brent crude fell by as much as 7.6pc to $71.15 a barrel in response to the retaliatory attacks, which were less severe than traders had expected.

By avoiding energy infrastructure in the region, the strikes eased concerns that Tehran would hit back against America by disrupting global oil supplies.

This came after traders had feared Iran could close the Strait of Hormuz, the vital “chokepoint” that serves as a shipping gateway to the Gulf.

It reflected a sharp turnaround in the market, as oil prices had previously surged to a five-month high earlier in the day.

Following Iran’s attack on the Al Udeid air base on Monday, which did not result in any casualties, Onyx Capital analyst Harry Tchilinguirian said: “This appears to me well orchestrated.

“Iran hits an empty US base, plenty of warning ahead with airspace closure and guidance for shelter. Iran gets its face-saving response and stays clear of the Straits of Hormuz.”

It came after Donald Trump demanded an immediate increase in US oil production to keep prices down.

In social media posts, the US president warned markets to “KEEP OIL PRICES DOWN” and then later called on his government’s energy department to “DRILL, BABY, DRILL… And I mean now!”

Any disruption to oil and gas supplies would cause a spike in prices, analysts have warned. Global investment giant Stifel predicted that it could cause household energy bills in Britain to almost triple to £4,500 in a worst-case scenario.

Heightened tensions in the Middle East led to tankers being warned of an “elevated risk” in the Strait of Hormuz on Monday amid reports that ships were having their navigation systems jammed.

The Joint Maritime Information Center (JMIC) warned that ships entering and departing the Persian Gulf were being hit by “persistently higher levels of electronic interference” that had scrambled satellite navigation and anti-collision systems.

One fifth of global oil supplies and about one third of liquefied natural gas (LNG) cargoes pass through the Strait, with analysts warning that a disruption to shipping risks pushing up prices.

On Monday, maritime tracking data showed ships behaving cautiously, with some performing about-turns, sailing in zigzags or approaching the strait more slowly than usual.

More than 20pc of the vessels passing through the strait on Sunday experienced GPS jamming, according to data provider Windward.

In the JMIC notice on Monday, ships were told: “JMIC recommends the shipping industry remain vigilant to the changing security environment and have threat and risk mitigation plans at-the-ready.”

It said that Iran could soon close the strait, after its parliament approved a motion to close the tanker route in response to the US air strikes.

The decision is non-binding and a final decision rests with Iran’s Supreme National Security Council. However, an EU official claimed Iran did not have the ability to block the Strait of Hor muz “long term”, although it could hamper shipping.

Closing the strait would be “a form of suicide”, the official said.

They added: “The effect on Israel would be close to zero, the effect on themselves immense, as well as on the United States, Europe and China.”

Iran’s own energy exports, in spite of sanctions, remain an important source of income for the world’s ninth-biggest oil-producing country.

It came as oil firms, including BP and TotalEnergies, evacuated some foreign staff from southern Iraq due to the “security situation” in the region.

Read the latest updates below.