Oil prices surged above $90 a barrel and U.S. stocks plummeted as escalating tensions in the Middle East rattled global markets. Brent crude oil futures climbed 1.5 percent on Thursday to settle at $90.65 a barrel, marking the highest closing price since October.

The uptick in oil prices came as traders evaluated the potential repercussions of a suspected Israeli attack on Iran’s consulate in Damascus, with fears mounting over potential retaliation from Tehran. A recent Financial Times article has a thorough review of such analysis.

According to the Financial Times, the stock market downturn coincided with remarks from Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, suggesting that U.S. interest rates may not decline as widely anticipated this year. Kashkari’s comments raised questions about the trajectory of U.S. monetary policy.

The surge in oil prices poses a challenge for central banks grappling with rising inflation. Federal Reserve Chair Jay Powell, cited by the Financial Times, recently acknowledged that the U.S. Government’s battle with inflation is ongoing, underscoring concerns that higher energy prices could further delay interest rate cuts by key central banks.

In response to the spike in oil prices, the U.S. Department of Energy announced the cancellation of its latest plans to purchase oil to refill the nation’s emergency crude stockpile. The Strategic Petroleum Reserve, which has been depleted in recent years to offset shortages caused by geopolitical disruptions, remains a focal point amid ongoing tensions in the Middle East.