BANGKOK — The price of Brent crude oil exceeded $100 per barrel early Thursday, marking a significant increase just days after it approached $120, as global markets grappled with the impact of escalating tensions between the U.S. and Iran. Oil prices surged more than 9% due to intensifying supply concerns, driven by Iranian attacks on commercial vessels in the strategically critical Strait of Hormuz. The U.S. has been conducting airstrikes in Iran for 13 consecutive days, further igniting fears surrounding oil supply disruptions.
In response to the ongoing conflict, the International Energy Agency (IEA) has committed to releasing 400 million barrels from its emergency reserves — the largest intervention of its kind in history — in an effort to stabilize energy markets affected by the war. The U.S. also plans to release 172 million barrels from its Strategic Petroleum Reserve in the coming week, aiming to mitigate the effects of soaring prices at the pump.
This development followed a meeting of energy ministers from the Group of Seven (G7) countries, which include Canada, the United States, France, Italy, Japan, Germany, and Britain, aimed at exploring strategies to bring down oil prices amidst the ongoing turmoil.
Market uncertainty surrounding the conflict has led to a decline in share prices. The S&P 500 futures dropped 0.4%, while futures for the Dow Jones Industrial Average fell by 0.5%. European markets mirrored this trend, with Germany’s DAX losing 0.4% to 23,533.60, the CAC 40 in Paris dropping 0.7% to 7,982.64, and Britain’s FTSE 100 sinking 0.7% to 10,285.91. In Asia, the Nikkei 225 fell by 1% to 54,452.96, the Kospi lost 0.5%, and the Hang Seng index decreased by 0.7%.
U.S. stocks had shown little movement earlier in the week, with the S&P 500 slipping 0.1% for a second consecutive day of modest trading. However, the Dow Jones hit its lowest level of the year, down 0.6%, while the Nasdaq composite saw a slight increase of 0.1%.
Heightened volatility in oil markets, primarily due to the sporadic nature of conflict in the Middle East, has raised significant inflation concerns. Analysts at Oxford Economics highlighted the potential for further spikes in Brent crude prices, which could reach as high as $140 per barrel, depending on developments in the geopolitical landscape.
In the broader economic context, a recent report indicated that U.S. consumers experienced a 2.4% increase in living costs, including groceries and gasoline, in February compared to the previous year, maintaining levels above the Federal Reserve’s 2% inflation target. This comes at a time when fears of “stagflation” — a stagnating economy coupled with high inflation — are mounting, particularly given the sluggish pace of hiring by U.S. employers.
Additionally, the dollar saw a slight decrease, trading at 158.84 Japanese yen, down from 158.95, while the euro also fell to $1.1553 from $1.1566, reflecting the growing uncertainty in the financial markets amidst these tumultuous events.
