Global shares decline as attacks on Iranian shipping push oil prices above $100
Global shares decline as Iran’s shipping attacks drive oil prices back above $100, intensifying market volatility and raising supply concerns.
Global markets reacted negatively after oil prices climbed above $100 a barrel due to new Iranian strikes on shipping in the Gulf, heightening concerns about rising inflation.
Asian shares declined significantly on Thursday as oil prices surged nearly 9% to surpass the $100 per barrel threshold, following reports of additional vessel attacks in Gulf waters and the shutdown of key oil terminals.
The increase in crude prices has raised worries that a new rise in energy costs could swiftly elevate inflation and compel central banks to maintain elevated borrowing costs for an extended period.
Investors seemed skeptical about the measures taken to stabilize supply. The International Energy Agency has announced plans to release 400 million barrels of oil from strategic reserves, marking the largest intervention in its history. Meanwhile, the United States stated it would start releasing 172 million barrels beginning next week.
Brent crude futures increased by 9.2% to $100.37 a barrel, building on gains from the prior session, while US crude futures advanced by 8.1% to $94.26.
Stock markets throughout Asia experienced a significant decline. MSCI’s broadest index of Asia Pacific shares outside Japan declined by 1.5%, Japan’s Nikkei decreased by 1.4%, Chinese blue-chip stocks fell by 0.6%, and Hong Kong’s Hang Seng index dropped by 1.2%.
Futures markets indicated additional weakness in Western markets, as S&P 500 and Nasdaq futures declined by 0.9%. Meanwhile, EUROSTOXX 50 futures decreased by 0.8%, and Germany’s DAX futures fell by 1%.
Early on Thursday, security officials in Iraq reported that explosive-laden Iranian boats hit two fuel tankers in Iraqi waters. A government official from Iraq informed state media that the operations at the country’s oil ports had “completely ceased.”
Reports indicated that Oman evacuated vessels from its key oil export terminal at Mina Al Fahal as a precaution.
Rodrigo Catril, a senior foreign exchange strategist at NAB, expressed that the market continues to be significantly worried about the situation in the Strait of Hormuz.
“The information we have received in the last 24 hours is not promising,” he stated, noting that there is an increasing risk that oil prices may keep rising instead of decreasing.
Iran has intensified its assaults on merchant shipping in the Strait of Hormuz, with reports indicating that at least 16 vessels have been hit since the onset of hostilities. Tehran has cautioned global markets to brace for oil prices soaring to $200 a barrel.
Additional uncertainty emerged when US President Donald Trump stated on Wednesday that the war with Iran had been “won,” yet indicated that the United States would continue its involvement in the conflict to fulfill its mission.
Earlier economic data indicated that US consumer prices increased by 0.3% in February, matching forecasts and surpassing January’s 0.2% rise.
Nevertheless, analysts noted that the figures were already being eclipsed by the inflationary risks stemming from the intensifying conflict, particularly as rising oil prices and supply chain disruptions were expected to exacerbate inflationary pressures in the coming months.
Bond markets mirrored those worries, as the prospect of increasing inflation drove yields upward globally. Yields on 10-year US Treasury notes increased by three basis points to 4.2374% following a significant overnight surge.
Investors have adjusted their expectations regarding interest rate cuts, concerned that central banks might have limited capacity to ease policy if energy costs keep increasing.
The currency markets indicated a preference for the US dollar as investors steered clear of currencies from energy-importing economies. The euro fell by 0.2% to $1.1539, marking its lowest point since November, whereas the dollar rose to 159.12, reaching its highest level since January.
The Australian dollar, typically regarded as a currency sensitive to risk, declined by 0.4% to $0.7122 after briefly reaching a three-year high the day before.
