Kholemuz is crucial! If oil prices break through the $100 mark, the US stock bull market may face a "major retreat crisis".

Just like a clock, Wall Street strategists and stock market investors are turning to a traditional playbook, with the core logic being that global stock market declines triggered by sudden geopolitical conflicts almost always present good buying opportunities. However, under the significant threat of international oil prices surging to $100, the classic stock market strategy of "buying the dip" becomes increasingly risky. This time, there is a major caveat to this classic investment strategy: if the geopolitical confrontation between the United States, Israel, and Iran continues, the international oil benchmarkBrent crude pricesare likely to rise to around $100 per barrel for a period of time, thereby stifling the U.S. economy, which has been primarily driven by consumer spending. As long as oil prices have not truly reached $100, global stock market pullbacks, including those in the U.S., may still be seen as shallow corrections that can be fixed, and the buy-the-dip strategy may still prevail; however, once the Strait of Hormuz risk pushes oil prices into the triple digits, inflation, interest rates, and consumer pressures may cause the old script of "bottoming out U.S. stocks" to completely fail. Although oil prices reaching $100 is not a consensus among oil analysts at the moment, it has become a significant potential risk that stock market bulls are considering. If energy costs continue to soar, it will not only threaten the growth path of consumer spending but may also reignite inflation and push interest rates higherthis market reasoning was evident in real-time in Monday's financial markets: the long-standing safe-haven assetU.S. Treasury bondsfailed to play its traditional role during times of heightened geopolitical tensions, as yields surged due to fears of resurging inflation and the Fed potentially shifting towards raising rates in response to high prices. Jay Woods, Chief Global Strategist at Freedom Capital Markets, wrote in a report, "If high oil prices persist for a significant period of time, concerns about inflation may start to heat up. This will present a significant and unexpected tax burden on consumers, while the Federal Reserve doesn't need to deal with this issue at a time when U.S. President Trump is pressing for rate cuts." On the first trading day after the attacks on Iran and subsequent military retaliations, the stock market's decline was proven to be temporary: the S&P 500 index initially dropped by as much as 1.2% after the market opened, but later recovered and traded mostly flat by midday, ultimately achieving a slight gain of 0.04%. West Texas Intermediate crude oil prices surged up to 12% at one point to $75.33 per barrel, before settling around $71. Brent crude oil, on the other hand, rose by 7.4% on Monday to $77.85 per barrel. As shown in the above chart, U.S. stocks face significant challenges once the global oil benchmark crosses $100. However, the escalating Middle East geopolitical situation is impacting a U.S. stock market that was already becoming more cautious due to concerns about the disruptive effects of AI on traditional industries, as well as cracks in the credit market. Top Wall Street institutions like Goldman Sachs see the current market as more of a high-probability stage of "first experiencing a round of volatility/retreat, then attempting to break through 7,000 points effectively to usher in a new bull market." Following the recent failed attempt to break 7,000, the "Anthropic storm" that severely damaged software stocks is still fermenting in the global stock marketa panic selling sentiment driven by the fear of AI disrupting everything still exists, and this, coupled with repeated capital flows and geopolitical risks, makes it easier for the S&P 500 to initially tread a "painful path" before moving higher. If oil prices surge to $100 or above, U.S. stocks may fall into a major retreat crisis The Bloomberg Intelligence strategy team notes that historically, it is only when oil prices rise above $100 per barrel that stock markets are truly troubled. They add that since 1983, in the year following a period where oil prices were above $100 per barrel, the S&P 500 index has, on average, fallen by 1.6%; some Wall Street analysts have already included this price level in their model predictions if transportation through the Strait of Hormuz is closed for a long period. Strategist Nathaniel Welnhofer stated, "This is the only price range we have studied that is negatively correlated with future returns, and it also has a certain psychological significance in itself." The Morgan Stanley stock strategy team led by Michael Wilson also considers a $100 per barrel oil pricea price increase of 75% to 100% year-on-yearas a condition for the global stock market to enter a bear market scenario. They further note that the likelihood of this happening increases when the economy is in the later stages of a cycle; the Morgan Stanley strategy team, led by Wilson, wrote, "Currently, we are in an early stage of the cycle, with earnings recovery accelerating." In Wilson's view, the "long-term bear market scenario" related to the weekend events in Iran and the Middle East generally occurs when oil prices significantly and sustainably rise, thereby threatening the continuity of the business cycle. The Morgan Stanley Chief Stock Strategist points to a historical experience threshold that must be met: firstly, a year-on-year increase in oil prices of 75% to 100%, and secondly, the impact occurring in the late stages of an economic growth cycle. Without meeting either of these conditions, geopolitical events are more likely to lead to a temporary pullback rather than a structural downturn. Wilson believes that the current market conditions are completely contrary to the aforementioned "high-risk combination," and he sees the current environment as an "early cycle environment," with earnings recovery accelerating, and he stated that "synergistic multiple drivers" are paving the way for a rolling cyclical recovery in the U.S. stock market. Morgan Stanley has designated 2026 as the "bull market for broad stock markets under rolling recovery," advocating a return of market risk preference from point to sector and a resonance in the upturn of multiple cyclical industries, with cyclical stocks leading the second stage bull market. Wilson maintains that the S&P 500 year-end target is 7,800 points, and similar to Goldman Sachs' view, Morgan Stanley also suggests that U.S. stocks may undergo a significant downward adjustment trajectory before achieving a stronger bull market path, due to geopolitical risks, trade tensions, and the pessimistic market sentiment surrounding the disruption caused by AI. However, there are reasons to believe that the U.S. economy, driven by tech stocks, is more capable of withstanding global oil price shocks than it was decades ago when it wasn't the world's largest oil producer. So far, the rise in oil prices has not yet pushed crude oil prices to near $100, which has been a concern for stock market bulls. Joseph Brusuelas, Chief Economist at RSM US, stated, "In today's U.S. economy, a surge in oil prices doesn't pose the same level of significant downside risk to overall economic growth or inflation as it did half a century ago." He added that he believes oil prices would need to rise to the range of $120 to $130 per barrel to cause a significant drop in consumer spending and potentially ignite inflation. "At present, the early price movements in the energy market do not pose any substantial risk to U.S. economic growth or inflation prospects." The situation largely depends on how long the military conflict between the U.S. and Iran will last and how long the interruption in oil transportation through the Strait of Hormuz will continue. Approximately one-fifth of global oil consumption passes through this strait. According to Bloomberg Intelligence, if this strait is closed by Iran for an extended period, it could result in a replication of the oil shocks seen during the 1973 Arab oil embargo and the 1979 Iranian revolution. The strategist team mentioned that the embargo in 1973 led to a stagflationary global recession, with the S&P 500 index experiencing an annualized decline of 29%; the second crisis accompanied an economic downturn in 1980, and yet the S&P 500 index still recorded an 11.3% annualized gain. U.S. Defense Secretary Pete Hegseth denied the occurrence of an "endless" geopolitical war with Iran, despite the U.S.-led airstrikes continuing for a third day on Monday. U.S. President Donald Trump said in a media interview that the progress of this action was "a little ahead of schedule," as he had originally expected it to last for four weeks. At least in the near term, global stock market traders will focus on a 100-mile-long "world energy chokepoint" that connects the Persian Gulf and the Gulf of Oman. On Monday, the S&P 500 index closed almost flat, significantly bouncing back from a steep decline earlier in the trading day. Traders are still weighing the potential impact of the escalating Middle East geopolitical conflict on financial markets, which has already triggered a rapid surge in the international oil benchmarkBrent crude oil prices on Monday. With oil and LNG transportation through the Strait of Hormuz almost at a standstill, and a major Saudi Arabian refinery facing production interruptions, the energy market has been severely impacted on the supply side, leading to a sharp rise in oil prices. While a surge in oil prices may disturb risk appetite, history has shown that U.S. stocks that experience a significant one-day increase in oil prices often still record positive returns in the month following the initial sell-off, indicating that there may be initial pressure followed by a recovery, which is more in line with the current market structure than a direct push to break through 7,000 points. What ultimately determines whether U.S. stocks can sustain a strong bullish trend after a retracement is not the conflict headline itself, but whether the oil price impact is sustained, whether the Strait of Hormuz transportation interruption is prolonged, and whether the resulting inflation/interest rate expectations deteriorate continuously. Adrian Helfert, Chief Investment Officer of Multi-Asset Strategies at Westwood Management, stated in a report, "If Iran deploys mines, fast attack boats, or drone swarms to restrict commercial passageeven if it's only a partial restriction or a temporary onethe impact on energy prices will be severe and immediate. We are watching this closely, as this is the scenario that would turn a geopolitical event into a direct global economic impact."