Oil prices jumped Thursday after several explosions were heard in Riyadh, Saudi Arabia, sending bond yields higher and pulling U.S. stock futures down. Brent crude, the international standard, rose 5% to $105.16 a barrel early in the day. Benchmark U.S. crude climbed 5.1% to $92.75.
A witness said one blast at Riyadh’s airport halted flights. No cause had been identified and no group claimed responsibility, though Yemen’s Iran-backed Houthis have targeted the kingdom’s infrastructure. Fighting has also intensified near the Bab el-Mandeb Strait, disrupting shipping, while Iran has targeted ships in the Strait of Hormuz, a major route for global crude.
Early in trading, the S&P 500 fell 0.3% and was heading for a second modest loss after hitting an all-time high. The Dow dropped about 200 points and the Nasdaq fell 0.5%. The yield on the 10-year Treasury rose to 5.29%, after touching a 24-year high of 5.36% on Wednesday.
Higher fuel costs add to inflation, which already sits above the Federal Reserve’s 2% target. Fed Governor Christopher Waller said in Istanbul that more rate hikes are likely if economic data keep coming in as expected. The Fed raised rates in September for the first time in three years.
Quarterly earnings are also arriving. PepsiCo beat revenue expectations but cut its full-year earnings-per-share growth outlook in half. Delta Air Lines reports Friday.