Oil Prices Surge After US Strikes on Iran Nuclear Sites
Oil prices spiked in early Monday trade due to concerns over potential disruptions in energy markets following US airstrikes on Iran’s nuclear facilities. As the US targeted these sites, Iran threatened retaliation against US military bases in the Middle East, fueling fears of an escalating conflict in the region. Iran, the world's ninth-largest oil producer, with an output of approximately 3.3 million barrels per day, could significantly impact global oil markets if it decides to retaliate. One of its potential responses could be to disrupt the Strait of Hormuz, a crucial passage that carries approximately one-fifth of the world's oil output.
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Market Reactions and Economic Uncertainty
Initially, both Brent crude and the US West Texas Intermediate (WTI) oil contracts surged by more than four percent, reaching their highest levels since January. However, these gains were later pared down, and by around 0030 GMT, Brent was up 2.2% at $79.20 per barrel, while WTI was 2.1% higher at $75.98. Economists at MUFG warned of high uncertainty regarding the outcomes and the duration of the conflict, predicting an oil price increase of up to $10 per barrel. A potential oil price shock could have a significant negative impact on most Asian economies, many of which are major net energy importers.
Global Stock Market Impact
Asian stock markets also reacted negatively to the unfolding situation. Tokyo’s Nikkei index fell by 0.6%, while Seoul saw a 1.4% drop, and Sydney’s market was down 0.7%. The market sentiment reflected growing concerns about the geopolitical situation, with some analysts suggesting that the mere threat of disrupting the Strait of Hormuz could lead to higher maritime costs, significantly affecting the global supply of crude oil and natural gas.
