Brent Tops $105, 10-Year Treasury Yield Hits 5.35% and Stock Futures Fall Amid Iran Strike Talk

Since The Atlantic reported Wednesday that the White House asked the Pentagon for Iran strike options before the Nov. 3 midterms, markets have been trading the possibility of a return to full-scale war. Thursday's pre-market action shows it.

Brent crude was up more than 5% to above $105 a barrel in early trading, according to NBC News market data. U.S. crude rose almost 5% to nearly $93. Earlier in Asia, Brent had been near $102, after rising about 4% on Wednesday.

Diesel futures jumped 4.5% in European trading. Heating oil, a proxy for jet fuel, rose more than 4%.

U.S. markets have not opened yet. Futures, which are indications and not trading prices, point lower: S&P 500 futures were down 0.6%, Nasdaq 100 futures down 0.8% and Russell 2000 futures down 1%. Regular trading begins at 9:30 a.m. ET.

Yields back near 24-year highs

The 10-year Treasury yield rose to 5.35%, reversing Wednesday's late drop. That is about where it stood on Oct. 1, when it hit 5.34%, the highest since 2002. It crossed 5% last month.

The Federal Reserve raised rates in September for the first time in three years. Minutes from that meeting pointed to further increases, and the dollar held firm.

David Clewell, a portfolio manager at T. Rowe Price, wrote last week that there is a "credible" likelihood the 10-year could climb toward 5.5% to 6%.

The S&P 500 and Nasdaq hit record highs Tuesday, then closed lower Wednesday. Tickmill Group said Thursday's moves ended a rally that had carried benchmarks back toward records and "reignited stagflation concerns."

What the White House is saying

No decision has been made on resuming combat operations, people familiar with the discussions told NBC News. Axios reported that the Pentagon is preparing a new round of major operations aimed at Iranian energy, infrastructure and nuclear targets.

An Israeli official told Axios the chances of major operations before the elections are "not high but we don't rule it out," with the odds rising after the midterms.

President Trump said late Wednesday: "I think the deal isn't really something that I want to do, but they're willing to offer us anything to stop."

Treasury Secretary Scott Bessent argued on Fox News that the pressure campaign is working. "They're cornered animals," he said, citing six weeks of military action, a blockade and an effort to cut off Iran's finances. He said he did not know whether Iran would "yell uncle" in a week, a month or two months.

Bessent said the June 3 memorandum of understanding failed because Iran began firing on ships in the Strait a few weeks later. "If there is a deal, I guarantee you they're going to stick with it," he said.

Hormuz: two different pictures

Secretary of State Marco Rubio has repeated that Washington controls the Strait of Hormuz and that oil flows are close to normal.

Shipping data says traffic is far below normal. MarineTraffic counted fewer than 23 ships a day through the strait from Sept. 28 to Oct. 4, against hundreds a day before the war.

UK Maritime Trade Operations said there have been nine attacks on tankers in the strait this month, half the September total for the waterway and the Gulf combined.

Maritime trackers also say Gulf exports excluding Iran recovered to more than 81% of pre-war levels in September. That figure is below normal, but well above the traffic count.

The IEA said Wednesday that member countries stand ready to release more reserves, with diesel the priority. G7 countries agreed last Friday to release 100 million barrels of crude and diesel.

Europe adds its own pressure

The oil move is landing on bond markets that were already stretched. France's 10-year yield has risen nearly 80 basis points since the start of September to its highest since July 2002, just short of 5%. France has said its deficit will exceed the 5% of GDP target this year, and it plans a record €340bn of bond sales in 2027.

A senior eurozone official told Reuters that neither the European Commission nor the ECB is expected to act. "The proper response is to agree on a budget," the official said. Eurozone officials see no sign of contagion to other countries yet.

The UK 10-year gilt yield settled at 5.45% on Wednesday. LSEG data show investors fully pricing four quarter-point Bank of England hikes by September 2027.

European chip stocks fell as investors sold AI-exposed tech. Tickmill said they are weighing AI hype against energy-driven cost pressure.

Tropical Storm Isaias is also expected to reach the U.S. Gulf Coast late Friday as a hurricane, adding another supply question for energy markets.

What comes next

Eurozone finance ministers and the ECB meet in Luxembourg this afternoon, with France's borrowing costs on the agenda. The ECB will publish minutes from its September meeting, and Bank of England Governor Andrew Bailey speaks later.

On Iran, the open question is timing. Trump has said he does not want the deal Tehran is offering, an Israeli official is signaling that the odds of action rise after Nov. 3, and early voting is already underway.