Oil Prices Rise Amid Middle East Tensions, Global Markets Slip
Oil prices experienced a notable jump early in the day due to growing instability in the Middle East, although they later moderated. By mid-morning, Brent crude rose 2.1% to $75.43 per barrel, and West Texas Intermediate (WTI) also climbed 2.1% to $78.64. Economists from MUFG cautioned that the ongoing conflict presents significant uncertainties, forecasting a possible $10-per-barrel price surge. They warned that such an increase could negatively impact many Asian economies that heavily rely on energy imports.
Asian stock markets reflected this cautious sentiment. Tokyo’s Nikkei index dropped 0.6%, Hong Kong’s Hang Seng fell by 0.4%, Seoul lost 0.7%, Sydney declined 0.8%, while Shanghai remained flat.
Meanwhile, the US dollar gained value against other currencies. However, analysts were skeptical about how long this upward trend would last. Sebastian Boyd from Bloomberg noted that if the dollar’s rise is merely a temporary reaction to US involvement in the Middle East, it may soon weaken again.
US Defense Secretary Pete Hegseth claimed that recent military actions had severely damaged Iran’s nuclear facilities, though officials acknowledged that the full extent of the damage remains unclear. These developments follow Israel’s bombing campaign on Iran earlier in the month.
Chris Weston of Pepperstone remarked that Iran might opt for a subtler approach rather than shutting down the Strait of Hormuz, which is vital for global oil transport. By merely suggesting they could disrupt this passage, maritime transport costs could rise significantly, affecting crude oil and gas supplies.
He also warned that while attention is currently focused on Middle Eastern events, issues surrounding US trade negotiations could also soon resurface and unsettle the markets.
Market Highlights (as of 0230 GMT):
Brent Crude: Up 2.1% at $75.43
WTI Crude: Up 2.1% at $78.64
Tokyo Nikkei 225: Down 0.6% at 38,175.63
Hong Kong Hang Seng: Down 0.4% at 23,426.02
Shanghai Composite: Flat at 3,360.97
Euro/Dollar: Down to $1.1505 from $1.1516
Pound/Dollar: Down to $1.3434 from $1.3444
Dollar/Yen: Up to 146.46 from 146.13
Euro/Pound: Down to 85.63 pence from 85.66
New York Dow Jones: Up 0.1% at 42,206.82
London FTSE 100: Down 0.2% at 8,774.65