Wall Street’s major indexes fell 1% on Thursday, with financial stocks taking a blow, as a surge in oil prices toward $100 a barrel rekindled inflation fears and investors kept a close watch on mounting jitters in the private credit sector.

Crude prices jumped after two tankers were set ablaze in Iraqi waters in apparent Iranian strikes, as part of wider attacks on oil and transport facilities across the Middle East. Iranian Supreme Leader Mojtaba Khamenei said the Strait of Hormuz should remain closed as a tool of pressure.

S&P 500 airline stocks, highly sensitive to fuel costs, fell 3.4% and are on track for their biggest monthly losses in a year. Cruise operators Norwegian and Royal Caribbean also fell more than 2.5%.

Energy companies Occidental gained 3.3% and ConocoPhillips rose over 1.4%.

Investors are also scrutinizing the roughly $2 trillion private credit market following a string of credit issues that have surfaced in recent months and Swiss private equity firm Partners Group warned private credit default rates could double in the next few years.

Morgan Stanley fell 4.3% after limiting redemptions at one of its private credit funds following similar actions by Blackstone and BlackRock earlier this month. Blackstone and BlackRock were down over 1% each.

JPMorgan Chase reduced the value of some loans to private credit funds on Thursday.

The broader S&P 500 financials sector dropped 1.5%, with banks Citigroup and Goldman Sachs down over 3%.

“The question is how many people have this on their books. Where is it being marked? Are they derivatives? We need to keep a very close eye on that as things unravel quickly,” said Joe Saluzzi, co-head of equity trading at Themis Trading.

Major Markets Fall

At 9:55 a.m. ET, the Dow Jones Industrial Average fell 582.01 points, or 1.23%, to 46,835.26, the S&P 500 lost 76.10 points, or 1.12%, to 6,699.50 and the Nasdaq Composite lost 312.95 points, or 1.38%, to 22,403.18.

The CBOE volatility index, Wall Street’s fear gauge, was up 2.53 points at 26.77, while the rate-sensitive Russell small-caps index lost 1.8%.

Global markets have been roiled this month as the U.S.-Israeli war with Iran has disrupted oil and gas supplies and sent crude prices sharply higher, complicating global central banks’ plans to ease monetary policy.

Goldman Sachs pushed its forecast for the Federal Reserve’s next rate cut to September, from June earlier. Money market futures show traders now see only one quarter-point cut by December, down from two cuts before the conflict.

The International Energy Agency said that the world is facing the biggest oil supply disruption ever.

Additionally, Washington said it was launching two new trade investigations into excess industrial capacity in 16 major trading partners and into forced labor, in a long-telegraphed move, to rebuild tariff pressure.

Dating app operator Bumble jumped 37% on Thursday after reporting fourth-quarter revenue above estimates.

Discount retailer Dollar General  fell 7.3% after forecasting annual comparable sales below estimates.

Chemical companies LyondellBasell and Dow rose 3.7% and 5.7% respectively after a Citigroup upgrade on new export opportunities from supply chain disruption in the Middle East.

On the data front, weekly jobless claims fell last week, which could help to assuage fears of a labor market deterioration after an unexpected decline in employment in February.

Declining issues outnumbered advancers by a 3.44-to-1 ratio on the NYSE and by a 3.07-to-1 ratio on the Nasdaq.

The S&P 500 posted nine new 52-week highs and 12 new lows, while the Nasdaq Composite recorded 18 new highs and 62 new lows.

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(Reporting by Medha Singh, Johann M Cherian and Utkarsh Hathi in Bengaluru; Editing by Sherry Jacob-Phillips and Maju Samuel)