Oil Tops $100 as Iran's New Leader Vows Hormuz Blockade; Dow Hits 2025 Low

International oil prices surged past $100 per barrel and all three major U.S. stock indexes fell sharply after Iran's new supreme leader declared he would continue blocking the Strait of Hormuz. Growing concerns over private credit defaults also weighed on investor sentiment.

On the New York Stock Exchange Wednesday, the Dow Jones Industrial Average dropped 739.42 points, or 1.56%, to close at 46,677.85—its lowest level this year. The S&P 500 fell 103.18 points, or 1.52%, to 6,672.62, while the Nasdaq Composite declined 404.16 points, or 1.78%, to 22,311.98.

Among mega-cap stocks, Nvidia fell 1.55%, Apple dropped 1.94%, Microsoft slid 0.75%, Amazon declined 1.47%, Alphabet lost 1.67%, Meta fell 2.55%, Broadcom dropped 1.64%, and Tesla tumbled 3.14%.

Markets weakened from the open after newly appointed Supreme Leader Ayatollah Seyyed Mojtaba Khamenei issued his first message declaring a hardline stance against the United States and Israel. In his inaugural official statement broadcast on state television, Khamenei said Iran "must continue using the Strait of Hormuz blockade as leverage to pressure the enemy" and that "review of forming a 'second front' that the enemy has not experienced and is vulnerable to has been completed."

The statement signaled Iran's intent to drive up oil prices by holding hostage the Strait of Hormuz, which handles roughly 20% of global crude shipments. Iran's Islamic Revolutionary Guard Corps also announced it attacked four vessels near the strait Wednesday, bringing the total number of ships attacked in the region since the war began to at least 16.

U.S. Energy Secretary Chris Wright told CNBC that American naval escorts for ships passing through the strait are "not ready" and would likely not be available "until the end of this month."

Concerns over private credit deterioration also pressured stocks. According to Reuters and Bloomberg, Morgan Stanley set redemption limits on a private credit fund below investors' actual requests. The firm notified investors it would honor only 45.8% of redemption requests after demands for its North Haven fund reached 10.9% of net asset value, returning just $169 million. Cliffwater Corporate Lending Fund, a flagship private credit vehicle from alternative investment manager Cliffwater, also capped redemptions at 7% after receiving requests totaling 14% of total shares in the first quarter.

Oil prices jumped back above $100 per barrel following Khamenei's remarks. Brent crude futures for May delivery surged 9.2% to close at $100.46 per barrel on the ICE Futures Exchange—the first close above $100 since August 2022. Brent had briefly topped $100 intraday on the 9th but closed in the $90 range. West Texas Intermediate crude for April delivery rose 9.7% to settle at $95.73 per barrel on the New York Mercantile Exchange.