Oil prices climb as US stocks give back only a bit of their record-breaking rally

NEW YORK (AP) — Oil prices are climbing following the latest rise in tensions between the United States and Iran, and U.S. stocks are giving back a bit of their record-breaking rally. The S&P 500 slipped 0.1% early Monday after the United States seized an Iranian-flagged cargo vessel over the weekend that it said had tried to evade its blockade of Iranian ports. The Dow Jones Industrial Average edged down 29 points, and the Nasdaq composite fell 0.3%. Brent crude climbed 4%. It’s a sharp turnaround from Friday, when oil prices tumbled after Iran said it was reopening the Strait of Hormuz.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Oil prices climbed more than 5% and Wall Street veered toward losses before the opening bell Monday as a standoff between Iran and the U.S. prevented tankers from using the Strait of Hormuz.

Futures for the S&P 500 also fell 0.5% while futures for the Dow Jones Industrial Average slid 0.6%. Nasdaq futures also were off by 0.5%.

The Persian Gulf’s Strait of Hormuz — a passageway for 20% of the world’s oil — was closed again after Iran reversed a decision to reopen the strait and President Donald Trump said a U.S. Navy blockade of Iranian ports remains in effect.

U.S. benchmark crude gained $5.18, or 6.3%, to $87.88 a barrel. Brent crude, the international standard, gained 5.3% at $95.20 a barrel.

President Donald Trump said Sunday that the U.S. had seized an Iranian-flagged cargo ship that tried to get around a naval blockade. Iran’s joint military command said Tehran would respond soon and called the U.S. seizure an act of piracy.

A fragile, two-week ceasefire between the U.S. and Iran is set to expire Wednesday, while escalating tensions in the Strait of Hormuz fueled pessimism over new talks to end the war.

Since the war began, market sentiment has swung wildly. A strong start to the earnings reporting season for big U.S. companies has helped support stocks.

“The problem for markets is not the absence of hope; it is the overpricing of it,” Stephen Innes of SPI Asset Management said in a commentary. “The latest move higher in equities has started to feel less like conviction and more like momentum feeding on itself.”

In equities trading early Monday, building insulation maker and distributor TopBuild jumped nearly 19% on news that it was being acquired by building materials company QXO for $17 billion, according to media reports. QXO shares dipped more than 4%.

Airline stocks tumbled again, as they tend to when oil prices jump. American and Delta both fell 2.6% while United fell 3.2%. United may have taken the bigger hit after American shot down the notion of merger with its rival, which was reportedly floated by United’s CEO last week at the White House.

On Friday, oil prices had dropped back to where they were in the early days of the Iran war, and U.S. stocks raced to a fresh record after Iran said the strait was open again for commercial tankers carrying crude from the Persian Gulf to customers worldwide.

A freer flow of oil could relieve pressure on prices for gasoline and all kinds of other products that get moved by vehicles. It could even ultimately help people pay less on credit-card interest and mortgage bills.

At midday in Europe, Germany’s DAX lost 1.4% and the CAC 40 in Paris shed 1.1%. Britain’s FTSE 100 fell 0.7%.

Despite renewed doubts about how soon ships will again transport the vast amounts oil the world gets from the Middle East, share prices were mostly higher in Asia., though they gave up the bigger gains of earlier in the session.

In Tokyo, the Nikkei 225 rose 0.6% to 58,824.89, while South Korea’s Kospi picked up 0.4% to 6,219.09.

Hong Kong’s Hang Seng added 0.8% to 26,361.07 and the Shanghai Composite index advanced 0.8% to 4,0802.13.

Australia’s S&P/ASX 200 edged 0.1% higher to 8,953.30.

In Taiwan, the Taiex jumped 0.4%. India’s Sensex rose 0.1% and the SET in Bangkok lost 0.2%.