NEW YORK (AP) — The Dow Jones Industrial Average dropped more than 1,000 points Thursday after the price of oil spiked to its highest level since the summer of 2024 because of the war with Iran.

The Dow sank 1,066 points, or 2.2%, and its steep losses accelerated through the day. The S&P 500, which is the measure of the U.S. stock market that many more 401(k) accounts follow, fell 1.2%, while the Nasdaq composite was down 1.1%, with roughly an hour remaining in trading.

The sell-off came as worldwide financial markets again followed the cue of oil prices. Sharp increases there are raising worries that a long-term spike could exhaust households’ ability to spend, grind down the global economy and push interest rates higher.

The price for a barrel of benchmark U.S. crude shot up 8.5% to settle at $81.01 per barrel. Brent crude, the international standard, climbed 4.9% to $85.41 per barrel and is also near its highest price since two summers ago.

The jumps came after Iran launched a new wave of attacks against Israel, American bases and countries around the region. The war's escalations are raising worries about how long disruptions will last in the region for the production and transport of oil and natural gas.

Prices at U.S. gasoline pumps have already jumped because of them. The average price for a gallon is $3.25, up 9% from $2.98 a week ago, according to auto club AAA.

To be sure, the U.S. stock market has a history of bouncing back relatively quickly following conflicts in the Middle East and elsewhere. That has many professional investors suggesting patience and riding through the market’s swings.

“While further escalation remains a risk, we think the more likely outcome is an increase in market risk aversion that likely lasts only a short time until investors can see a winding down of hostilities,” according to Scott Wren, senior global market strategist at Wells Fargo Investment Institute.

But if oil prices spike, like to $100 per barrel, and stay there, it could be too much for the global economy to withstand. Uncertainty about that has caused frenetic swings across financial markets this week, sometimes hour by hour.

Much will depend on what happens with the Strait of Hormuz. Roughly a fifth of the world’s oil typically sails through the narrow waterway off Iran's coast.

Source: WPLG