Oil prices jump as Iran attacks UAE, US warships enter Hormuz ~ EconomyLens.com

New York (AFP) – Oil prices jumped on Monday after a drone strike sparked a fire at an Emirati energy installation following US warships crossing the crucial Strait of Hormuz. Seoul and Taipei hit record highs Monday as Asian traders joined the rally in tech shares, but US equity indices retreated from record finishes last week.

Oil prices climbed, with the benchmark international contract Brent crude for July delivery jumping more than five percent, after a drone strike caused a fire at an energy installation in the emirate of Fujairah, authorities said Monday. The UAE defense ministry later stated that Iranian drone and missile attacks were targeting the country.

Earlier, the US Navy reported that destroyers passed through the Strait of Hormuz as part of a new ship escort mission announced by US President Donald Trump over the weekend. Iran’s state TV claimed that the Iranian navy fired a cruise missile “warning shot,” while the United Arab Emirates reported earlier that Iran had fired drones at one of its oil tankers. Tehran’s forces effectively closed the strait, a key route for oil and gas shipments, in response to the US-Israeli military campaign that began on February 28, while Washington maintained a blockade of Iranian ports.

Trump has indefinitely extended an initial two-week ceasefire that halted the fighting; however, the conflict — along with its widespread economic fallout — remains unresolved. Despite the Middle East crisis continuing to rumble along, investors have also focused on the corporate world, where stellar first-quarter earnings have prompted a return to the AI trade that has propelled several markets to record highs.

Forecast-beating reports last week from Apple, Google, Microsoft, and Samsung reawakened interest in the artificial intelligence sector after the market tumult caused by the US-Israeli strikes on Iran at the end of February. There’s “optimism that AI continues to mask the pain elsewhere,” said Swissquote analyst Ipek Ozkardeskaya. Companies in the S&P 500 are on track to report earnings growth of 27.1 percent, the highest rate in more than four years, according to FactSet.

However, there are further tech firms set to report earnings, including Palantir later on Monday, followed by Advanced Micro Devices and Arm Holdings later this week. The tech-heavy Nasdaq initially pushed higher from a record close on Friday but fell into the red as oil prices jumped higher. Briefing.com analyst Patrick O’Hare stated that while the stock market may be overstretched, many investors who missed the rally may be looking for a pullback to buy into it. “That is perhaps why the indices just aren’t selling off to any large degree,” he said.

Seoul surged more than five percent and Taipei jumped more than four percent to hit fresh records. South Korean chip giant SK Hynix was the standout, piling on 12.5 percent, while rival Samsung was up more than five percent. Taiwanese counterpart TSMC was up 6.6 percent.

Paris and Frankfurt ended the day down more than one percent. Tokyo, Shanghai, and London were closed for holidays. The yen spiked earlier Monday against the dollar, prompting speculation of another intervention. The currency moved sharply higher against the greenback on Friday, with media reports stating that Tokyo had spent $31 billion propping up the beleaguered currency.