Oil Surges to $120 in Mere Hours Only to Pull Sharply Back by 15%. What’s Happening?

Oil, the new meme trade? Volatility is the name of the game as the new week kicks off.

🛢️ $120 Oil: Spike, Snap, Repeat

• West Texas Intermediate crude (WTI) surged nearly 30% Sunday evening to $120 a barrel as the US-Israel campaign against Iran entered its second week. Within hours, prices snapped back sharply by 15% to near $100, reminding everyone that in a market this thin and this scared, moves go both ways at warp speed.
• Brent crude, the international benchmark, had already jumped 27% last week to above $90. Oil crossing $100 a barrel marks the first time since the Russia-Ukraine conflict began in 2022, a level that carries psychological weight well beyond the number itself.
• Gasoline prices are surging alongside crude. What’s particularly scary about this surge is that when oil moves like this, it does not stay contained to trading screens. It shows up at the pump, in airline tickets, in grocery bills. The consumer feels this one fast.

🚢 Hormuz Stays Shut, Fear Stays Bid

• Iran's effective closure of the Strait of Hormuz remains the structural driver behind the oil spike. The strait handles roughly 20% of the world's daily oil shipments and with it out of business, alternative supply routes are longer, slower, and more expensive.
• The longer the strait stays closed, the more the market prices in a sustained supply shock rather than a temporary disruption. That distinction matters enormously. Temporary disruptions get faded. Sustained ones get built into inflation forecasts, rate decisions, and growth outlooks.
• Gold prices XAU/USD rose a modest 0.2% to around $5,166 an ounce. For a traditional safe haven, that is a surprisingly quiet reaction to $120 oil and four-digit futures losses. Gold appears to be digesting rather than leading right now.

📅 A Week Packed With Market-Moving Data

• Equity futures are deep in the red heading into Monday. Dow Jones DJI futures dropped more than 1,000 points, or over 2%, while S&P 500 SPX and Nasdaq Composite IXIC futures slid 1.7%. Last week the Dow lost 3.0% and the S&P 500 fell 2.0%, their worst weekly declines in months.
• Looking ahead, Wednesday brings the Consumer Price Index for February, the broadest monthly read on US inflation. Friday delivers the Personal Consumption Expenditures index for January, the Fed's preferred inflation gauge. With oil at these levels, both prints carry extra voltage this week.
• CPI measures what consumers pay for a basket of goods and services. PCE measures what they actually spend. Together they give the Fed its clearest read on whether inflation is cooling or reaccelerating. Right now, with oil doing what it is doing, neither number is likely to bring comfort.