U.S. stocks plunged and energy prices soared Tuesday as fears spread through global markets that the Iran war may bring prolonged disruption.

The reaction came as President Donald Trump indicated the U.S.-Israeli operation may last weeks. Iran’s retaliatory attacks across the Middle East have hit U.S. embassies and Gulf oil facilities and brought shipping through the Strait of Hormuz, a key waterway for global fuel supplies, to a near standstill.

The conflict has also caused huge travel disruptions, with tens of thousands of people and air cargo stranded in popular destinations like Dubai, in the United Arab Emirates, that have been targeted in strikes by Tehran.

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The S&P 500 slid 1.4% in midday trading, while the Dow plunged more than 700 points. The Nasdaq composite, which tracks more tech-focused companies, dropped 1.4%.

Meanwhile, energy prices continued to soar after posting a large jump Monday.

U.S. crude oil traded higher by 6.5%, bringing its total increase since Sunday night to more than 13% and pushing prices to their highest since January 2025.

The international crude oil benchmark jumped 6.7% to its highest level since July 2024.

Shares of energy companies were some of the best performing stocks in early trading on the prospect of higher profits and margins off the back of higher oil and gas prices.

The soaring price of crude oil has also pushed retail gasoline prices higher. As of early Tuesday, the average U.S. gas price has jumped 18 cents since last week to $3.106 per gallon.

By the end of the week, GasBuddy analyst Patrick De Haan predicted “we’ll likely be closer to $3.10-$3.20/gal.”

Natural gas prices also continued their rise, jumping more than 5% Tuesday morning. Natural gas futures traded in Europe rose 20%, after QatarEnergy said it would halt liquified natural gas production Monday and on Tuesday suspended the production of a number of other energy products.

Markets also reacted negatively around the world.

In Spain, the IBEX stock index dropped sharply, ending the day down 4.5%. Italy’s FTSE MIB closed down 3.9%, Germany’s DAX stock index tumbled 3.6%, while stocks traded on the flagship indexes in France and the United Kingdom declined around 3%.

The Stoxx 600, Europe’s answer to the S&P 500, slid nearly 3.2%. In Asia, Korea’s Kospi average plummeted 7% and Japan’s Nikkei 225 slid 3%. Stocks in China, Hong Kong and India also fell more than 1%.

“The negative tone in risk arguably reflects the sense that missile and drone attacks are intensifying and spreading through the Middle East as Iran hit the U.S. embassy in Riyadh and Israel targeted Hizbollah in Lebanon,” analysts at Lloyds Bank said Tuesday.

“Trump equivocating on the potential duration of the war and remaining questions about the precise objective don’t help quell market uncertainty either,” they added.

U.S. markets finished Monday on a relatively muted note. However, the additional strikes overnight and new comments from Trump seemed to raise alarm among traders, who moved out of more volatile assets like stocks and into bonds.

“The focus will now be on whether Iran can escalate its attacks on the production facilities of the region’s key marginal energy suppliers,” analysts at ING wrote in a research note Tuesday.