An oil price surge was recorded on Thursday, with crude prices rising by around 3%, as renewed geopolitical tensions in the Middle East rattled global financial markets and weighed on investor sentiment.
The gains come after reports of military activity involving the United States and Iran, alongside claims of missile attacks near an American base in Kuwait, raising concerns over regional stability and energy supply routes.
Brent and US crude rise sharply
Brent crude opened trading with an increase of 3.6%, reaching $97.71 per barrel, while US West Texas Intermediate rose 3.8% to $92.05.
Later trading showed Brent up 2.8% at $96.96 per barrel, while US crude stood 2.9% higher at $91.20, reflecting sustained volatility in energy markets.
The oil price surge has been supported by limited traffic through the Strait of Hormuz, a key global energy transit route, heightening supply concerns.
Asian markets fall on risk sentiment
Asian equities also came under pressure as investors reacted to the developments.
Japan’s Nikkei index fell by 1.4%, while South Korean shares dropped 3.2%. The broader MSCI Asia-Pacific index excluding Japan declined by 2.1% before trimming losses later in the session.
The oil price surge added further pressure to markets already sensitive to geopolitical uncertainty and inflation risks.
Bond yields rise on inflation fears
US 10-year Treasury yields climbed by 4 basis points to 4.526%, reflecting expectations that sustained high oil prices could drive inflationary pressures.
Higher energy costs are increasingly being viewed by investors as a potential trigger for broader price increases across global economies.
Central banks face policy pressure
According to Citi, a prolonged oil price surge is beginning to translate into wider inflation risks, particularly through secondary economic effects.
This could push central banks toward more aggressive monetary policy responses if energy-driven inflation persists.
However, uncertainty over the timing of any geopolitical agreement continues to complicate policy decisions.
Outlook remains uncertain
Analysts suggest that the next two weeks could be critical, with either a ceasefire agreement expected or a breakdown in negotiations leading to renewed hostilities.
There is also growing uncertainty over the security and operational costs of the Strait of Hormuz, including rising insurance premiums for shipping routes.
Some estimates place the probability of a deal at around 70%, although risks remain elevated amid ongoing regional instability.
Source: CNA
Also read: US strikes Iran amid ceasefire tensions and failing negotiations
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