Dow futures reverse higher and oil prices pare gains as escalating Israel-Iran conflict targets critical energy assets

• Stock futures were higher on Sunday as investors weighed the impact of the escalating Israel-Iran conflict that shows no signs of any potential off-ramps ahead. Oil prices rallied after Israel attacked key areas of Iran’s energy infrastructure over the weekend, while Tehran said closing off the Strait of Hormuz was under serious consideration. Fed policymakers will meet in the coming week.

U.S. stocks signaled a rebounded Sunday night as futures rose amid the escalating Israel-Iran conflict that shows no signs of any potential off-ramps ahead.

Stocks sold off sharply on Friday after Israel launched an air campaign that struck Iran’s top military leadership, nuclear facilities, and bases around the country.

Over the weekend, both sides continued their bombardments with key areas of Iran’s energy infrastructure increasingly targeted. That includes oil refineries, fuel depots, and a massive natural gas field.

Futures for the Dow Jones Industrial Average reversed higher, rising 44 points, or 0.1%. S&P 500 futures were up 0.14%, and Nasdaq futures rose 0.20%.

U.S. oil prices pared earlier gains, climbing 1.1% to $73.79 per barrel, and Brent crude rose 1% to $74.94. That’s after oil soared 7% on Friday as markets reacted to the early stages of the Israel-Iran conflict.

An Iranian lawmaker said over the weekend that closure of the Strait of Hormuz, a critical chokepoint in the global energy trade, was under serious consideration. The equivalent of 21% of global petroleum liquids consumption, or about 21 million barrels per day, flows through the strait.

In a note on Saturday, George Saravelos, head of FX research at Deutsche Bank, estimated that the worst-case scenario of a complete disruption to Iranian oil supplies and a closure of the Strait of Hormuz could send oil price above $120 per barrel.

The yield on the 10-year Treasury slipped 0.9 basis point to 4.415%. The dollar fell 0.17% against the euro and 0.17% against the yen. Gold rose 0.2% to $3,459.90 per ounce.

Surging oil prices reignited inflation fears, just as consumer price data was showing more signs that President Donald Trump’s tariffs were having minimal impact so far.

That put upward pressure on the 10-year yield on Friday as hopes for rate cuts from the Federal Reserve later this year dimmed.

Inflation, tariffs, and the volatile geopolitical landscape will be top of mind when Fed policymakers are due to meet this Tuesday and Wednesday.

While they aren’t expected to adjust rates, they will release a fresh set of forecasts for future rates and economic indicators. Chairman Jerome Powell will also hold a press briefing on Wednesday afternoon.

This story was originally featured on Fortune.com