Why oil prices reversed course, tumbling below $100 per barrel

Stocks staged a comeback, oil prices plunged, bond yields slipped, and Wall Street’s "fear gauge" declined after oil turned lower as fears faded of a protracted United States-Iran war.

Brent crude, the international standard, surged to $119.50 per barrel early on March 9 but ended the trading day down 5.03% at $88.03 per barrel. West Texas Intermediate, the crude produced in the U.S., slumped 7.59% to $84 per barrel around 4:40 p.m. ET.

The conflict hit new milestones over the weekend, with Iran naming Mojtaba Khamenei to succeed his father, Ali Khamenei, as supreme leader.

Oil is still unable to pass through the Strait of Hormuz, which Iran has effectively blocked. At the start of the war, many analysts had expected prices to jump this high, but most also assumed the key passageway would re-open relatively quickly, keeping the surge in prices relatively contained. So far, however, there is no sign of hostilities easing. Major oil-producing countries have run out of places to store their oil and have begun to cut their production.

By afternoon, though, markets turned around. Oil prices fell sharply and stocks soared.

President Donald Trump suggested in a CBS News interview that fighting with Iran would end soon, and the Group of Seven industrialized nations was planning an emergency meeting to discuss a joint release of petroleum reserves to bring in more supply and lower prices.

How high will gas prices rise?

Around the country, the higher cost of oil is starting to show up at the pump. Analysts have previously told USA TODAY that gas prices move roughly in proportion to that of oil, which has surged nearly 50% over the past few weeks.

"Consumers really start to get concerned when the pump price goes above about $3.50 a gallon," one oil industry analyst said last week. The national average as of Monday morning was $3.455 per gallon, according to GasBuddy.

"I believe there is roughly an 80% chance the national average price of gasoline reaches $4 per gallon within the next month- or sooner," Patrick De Haan, an independent energy analyst, wrote on March 8.

"The financial impact is significant," De Haan added. "Americans spend roughly $3.7 million more per day for every one-cent increase in the national average price of gasoline."

This story has been updated to add new information.