Oil Crashes Past $100, Stocks Decline as Dollar Strengthens Amid Inflation Fears

Global equity markets ended lower on Friday amid a sharp rise in crude oil prices, with the benchmark CL=F futures breaching $100 per barrel for the first time since late 2023. The spike, driven by supply constraints and geopolitical tensions in the Middle East, triggered a broad market selloff as investors reassessed inflation risks and the trajectory of central bank policy. The VIX index, a measure of market volatility, jumped 14% to close at 23.8, signaling increased investor anxiety. Energy stocks posted strong gains, led by XLE, which rose 4.2% on the day. Major producers such as ExxonMobil (XOM) and Chevron (CVX) saw their shares climb over 3.5%, benefiting from the oil price surge. Meanwhile, the broader S&P 500 declined 1.7%, pressured by rising bond yields and a strengthening U.S. dollar, which appreciated 1.1% against a basket of major currencies. The greenback's rally reflects growing expectations that the Federal Reserve may extend its high-interest-rate stance into 2027. The surge in oil has intensified concerns about cost-push inflation, particularly for sectors reliant on transportation and industrial inputs. Materials stocks, including those in the aluminum and steel industries, underperformed, with the S&P 500 Materials sector dropping 2.1%. Analysts warn that sustained oil above $100 could erode consumer spending and corporate margins, particularly in emerging markets. Market participants are now closely watching OPEC+ meetings and U.S. crude inventories for signals on supply dynamics. With the dollar’s strength and crude’s momentum converging, volatility is expected to persist in the near term, especially ahead of U.S. inflation data due next week.