The overall stock market dropped sharply Friday, with the SPDR S&P 500 Index (NYSE:SPY) closing down more than 1% in part due to investors’ fears of an imminent attack by Iran against Israel. While traders were selling stocks, they were buying oil in anticipation of a price hike due to a military escalation in the Middle East, where much of the world's oil is produced.
What Happened: Those fears were realized over the weekend with an Iranian attack on Israel, although a coalition of military forces from Israel, the United States, France and other countries defended a majority of the drone attacks. Still, many experts worry that the ongoing Israel-Hamas war in the Middle East could keep oil prices higher for longer, which increases the probability of a recession in the U.S. and other countries.
Analyst Take: Nick Colas, the co-founder of DataTrek Research, said that if oil prices hover at prices above $100 a barrel, a recession in ...