Stocks sank on Wall Street Thursday after the price of oil spiked to its highest level since the summer of 2024 because of the war with Iran.

The S&P 500 fell 0.6% and erased what had been a small gain for the year so far. The Dow Jones Industrial Average briefly dropped more than 1,100 points before finishing with a loss of 784, or 1.6%. The Nasdaq composite slipped 0.3%.

The losses came as financial markets around the world keep following the cue of oil prices.

The price for a barrel of benchmark U.S. crude shot up 8.5% Thursday to settle at $81.01 per barrel. Brent crude, the international standard, climbed 4.9% to $85.41 per barrel and is likewise near its highest price since 2024.

Prices at U.S. gasoline pumps have already leaped 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.

If oil prices spike further, like to $100 per barrel, and stay there, some analysts and investors say it could be too much for the global economy to withstand. Uncertainty about what will happen has caused frenetic swings across financial markets this week, sometimes hour by hour.

Mortgage rates back over 6%

The average long-term U.S. mortgage rate came off its lowest level in three and a half years this week, as bond yields marched higher following a spike in oil prices due to the war with Iran.

The benchmark 30-year fixed rate mortgage rate ticked up to 6% from 5.98% last week, mortgage buyer Freddie Mac said Thursday. One year ago, the rate averaged 6.63%.

The modest increase ends a three-week slide in the average rate, which has been hovering around 6% this year. Last week’s average rate marked the first time it dropped below 6% going back to September 2022.