HONG KONG: World oil prices soared more than five percent Wednesday after US President Donald Trump said the ceasefire with Iran was over, following fresh strikes in the Middle East.
International benchmark Brent North Sea crude jumped 5.3 percent to $78.09 a barrel, while the main US contract, West Texas Intermediate, advanced 5.4 percent to $74.23 a barrel.
The US has launched extensive strikes on Iran following attacks on ships in the Strait of Hormuz, triggering a wave of reprisals against American bases in the Gulf.
The escalation has raised doubts over ongoing efforts to de-escalate the conflict between Washington and Tehran and restore unrestricted shipping through the vital maritime route, which handles a significant share of global oil trade.
The United States Central Command said its latest strikes on Iran were carried out in response to attacks on commercial vessels travelling through the Strait of Hormuz. It warned that the operations were aimed at imposing “heavy costs” on those targeting international shipping.
Three vessels were reportedly hit near Oman after the country had proposed a temporary transit corridor along its coastline to help maintain maritime traffic.
Tehran opposed the initiative as it continued to push for a fee system for ships passing through the waterway, a demand rejected by Washington.
Iran’s foreign ministry accused the United States of repeatedly breaching a previously agreed understanding between the two sides and warned that Tehran would take “decisive measures” to defend its interests and national security.
The latest strikes came shortly after Washington withdrew a temporary sanctions waiver that had allowed some Iranian oil exports.
According to AFP, both major crude benchmarks climbed more than 2 per cent on Wednesday, following similar gains a day earlier, reaching their highest levels in two weeks.
West Texas Intermediate (WTI) crude rose 2.3 per cent to $72.03 a barrel, while Brent crude gained 2.2 per cent to $75.76 a barrel.
Security expert Andreas Krieg of King’s College London said Iran appeared determined to maintain its demand for imposing charges on vessels using the Strait of Hormuz.
“We are now in a sensitive period where potential alternatives to an Iranian toll or fee system are being explored,” he said, adding that Tehran was signalling that it would not accept alternative arrangements.
Markets react to rising geopolitical risks
The renewed US-Iran confrontation also weighed on global financial markets, adding to concerns caused by a recent technology sector sell-off linked to questions over high valuations and future returns from heavy investment in artificial intelligence.
Asian markets mostly declined, with South Korea’s KOSPI falling more than 1 per cent. The index has dropped more than 20 per cent since reaching a record high last month.
Shares of Samsung Electronics also faced further pressure despite the company forecasting a sharp rise in second-quarter operating profits, driven by strong demand for artificial intelligence-related chips.
Markets in Tokyo, Shanghai, Sydney, Singapore, Wellington and Taipei also recorded losses, while Hong Kong shares gained more than 1 per cent.
Nick Twidale of AT Global Markets said investors had shifted their attention back to geopolitical risks after focusing heavily on artificial intelligence and technology stocks in recent weeks.
“Geopolitical tensions should dominate market sentiment, especially if we see further escalation in the coming sessions,” he said.
Dollar strengthens amid inflation concerns
The US dollar strengthened against major currencies as fears of renewed disruptions to Middle Eastern oil supplies increased concerns that inflation could remain elevated for longer.
The prospect of prolonged inflation pressures could put additional pressure on the Federal Reserve System to maintain higher interest rates.
Analysts warned that any further escalation around the Strait of Hormuz could intensify volatility across energy markets, currencies and global equities.
Key market figures (Around 0200 GMT)
West Texas Intermediate (WTI): Up 2.3% at $72.03 per barrel
Brent Crude: Up 2.2% at $75.76 per barrel
Stock markets
Tokyo – Nikkei 225: Down 0.6% at 67,827.89
Hong Kong – Hang Seng Index: Up 1.9% at 23,936.60
Shanghai Composite: Down 0.2% at 3,980.82
Seoul – Kospi: Down 1.5% at 7,540.18
New York – Dow Jones Industrial Average (close): Down 0.3% at 52,925.15
London – FTSE 100 (close): Up 0.1% at 10,665.88
Currencies
Euro/Dollar: $1.1406 (previously $1.1415)
Pound/Dollar: $1.3350 (previously $1.3360)
Dollar/Yen: ¥162.37 (previously ¥162.09)
Euro/Pound: 85.43p (previously 85.44p)
