The ongoing U.S.-Israeli conflict with Iran is pushing oil prices to around $100 per barrel, causing global stocks to drop on Thursday. The S&P 500 experienced a 1.5% decline, resuming its volatile trend after a brief period of stability. The Dow Jones Industrial Average fell by 1.5%, a total of 739 points, while the Nasdaq composite saw a 1.7% decrease.
The focal point of concern remains the oil market, with Brent crude reaching $101.59 per barrel. There are fears that the conflict could disrupt oil production and transportation in the Persian Gulf, leading to significant inflationary pressures on the global economy.
Iran’s intensified attacks on oil infrastructure in Gulf Arab countries, including oil fields and refineries, have resulted in a halt in cargo traffic through the vital Strait of Hormuz, a key route for global oil shipments. To counter the impact of the war on energy markets, the International Energy Agency (IEA) announced the release of 400 million barrels of emergency oil reserves, the largest volume in its history. Additionally, the U.S. plans to release 172 million barrels from its Strategic Petroleum Reserve to tackle soaring prices.
Despite efforts to stabilize prices, ongoing uncertainty has fueled concerns that oil prices could further escalate, leading to a downward trend in global markets. Oxford Economics highlighted the potential for oil prices to surge to $140 per barrel due to the lack of a clear resolution timeline for the conflict and the continued closure of the Strait of Hormuz.
Since the conflict began on February 28, sharp fluctuations in oil prices have triggered market volatility worldwide, with prices hitting levels not seen since 2022. European markets, including Germany’s DAX and Britain’s FTSE 100, remained relatively stable, while the CAC 40 in Paris experienced a 0.4% decline. In Asian trading, the Nikkei 225 in Tokyo fell by 1%, the Kospi in South Korea dropped by 0.5%, and Hong Kong’s Hang Seng decreased by 0.7%.
Currency trading saw the U.S. dollar weakening against the Japanese yen and the euro. These market movements reflect the ongoing impact of the conflict on global financial markets.