Oil Prices Rise, Stocks Fall After Iran Attacks on Tankers
Crude oil prices rose sharply and US stocks slumped after Iran attacked a Kuwaiti-owned oil tanker off the Dubai port. The attack comes amid ongoing tensions in the Middle East, which show no signs of abating.
West Texas Intermediate (WTI) crude rose 3.4%, reaching over $106 per barrel following the attacks. Meanwhile, futures for the S&P 500 index fell 0.3% after the major index fell to its lowest level since August, nearly entering a correction zone. Asian stocks are expected to follow suit, with Australian shares opening lower.
The US dollar, a safe haven since the war began, edged slightly higher on Tuesday. The war in the Middle East has disrupted global markets and raised concerns about inflation and economic disruptions. The conflict has cut off vital energy supply lines, sending oil prices soaring and pushing the S&P 500 toward its worst month since 2022.
US President Donald Trump stated that if Iran does not reopen the Strait of Hormuz, "we will end our stay in Iran by destroying and dismantling" power plants, oil facilities, and "possibly" desalination infrastructure.
Meanwhile, US bonds rose on Monday after Federal Reserve Chairman Jerome Powell allayed concerns about near-term inflation risks from rising energy prices. Powell said that longer-term inflation expectations appear to remain subdued, prompting the market to begin phasing out expectations of an imminent interest rate hike.
Australian and New Zealand bond rates also fell on Tuesday morning, following the movement in the US bond market. Evercore's Krishna Guha said, "Powell's calm tone and the market's focus on growth risks from higher oil prices are driving the change in interest rate projections."
In the stock market, the Nasdaq 100 is currently 12% below its October high. This decline was triggered by concerns that rising oil prices due to the war in the Middle East could hamper economic growth and trigger renewed inflation. (asd)
Source: Newsmaker.id
