A roller-coaster day for oil prices showed how they’re dictating where financial markets and maybe even the global economy are heading. Stocks tumbled in Europe and Asia when oil prices shot higher early on Thursday, but U.S. stocks pared their sharp losses as the day progressed and oil prices fell back.

The morning began with the shock of Brent crude, the international standard, briefly rising above $119 per barrel, up from roughly $70 before the war with Iran began.

The jump followed intensified attacks by Iran on oil and gas facilities around the Persian Gulf in response to an Israeli attack on an important Iranian natural gas field. They worsened fears that the war could knock out oil and gas production in the Middle East for a…