Crude Oil Futures Surge Higher by 4% on Rising Geopolitical Tensions

Crude oil futures are on the rise and are up by 4.5% at the time of writing. Over the weekend, Ukraine launched a surprise drone attack on Russia, risking the possibility of oil supply chain headwinds. Russia is one of the top oil producers in the world and produced nearly 11 million barrels per day in 2023, according to the U.S. Energy Information Administration.

How do Rising Oil Futures Affect Stocks?

While the stock market and crude oil prices do not have a strong correlation, rising oil prices are generally a negative for stocks. That’s because they result in increased transportation costs for both consumers and businesses. If consumers are less willing to travel, hospitality and retail stocks could be affected as well.

Higher oil prices also contribute to inflation. On the other hand, rising oil prices benefit the companies that supply them, such as Exxon Mobil (XOM) and Chevron (CVX), which are both trading higher in the premarket.