London (AFP) – Oil prices rose and stock markets diverged Monday as the Middle East crisis escalated with the entry of Houthi rebels into the Iran war and speculation that the United States could deploy troops on the ground. Brent North Sea crude, the international benchmark, jumped more than three percent at one point to reach almost $117 per barrel. In Europe, London was up slightly in late morning trading, while Paris and Frankfurt were little changed, supported by gains to share prices of heavyweight energy and mining groups. Shares of oil companies such as TotalEnergies and BP were up about 2 percent, outpacing the rest of the market.
Aluminium prices climbed as much as around six percent on the London Metal Exchange after Iran attacked two major aluminium plants in the Gulf, raising concerns over supply disruptions. Asia’s leading stock markets closed lower, while the dollar traded mixed. The Japanese yen jumped on talk that the Bank of Japan could intervene on markets to shore up the country’s currency. The yen’s gains weighed heavily on Japanese exporters, with the Tokyo stock market closing down almost three percent.
“While the US dollar has seen some strength from haven-seekers, it is oil which remains centre stage,” noted Richard Hunter, head of markets at Interactive Investor. “Attacks in the Gulf continued over the weekend, with a new layer of risk emerging as Yemen’s Houthis entered the fray, which could restrict shipping in the Red Sea, adding another choke point to oil supplies.” As the conflict moved into its fifth week, the spectre of a widening conflict grew as Houthi rebels on Saturday said they had fired “a barrage of cruise missiles and drones” at strategic sites in Israel.
The strikes raised concern about the war spreading to the Red Sea, with Saudi Arabia rerouting much of its oil exports there to avoid the Strait of Hormuz, through which about 20 percent of crude and gas usually passes and has been effectively closed by Tehran. Adding to the dour mood were US President Donald Trump’s remarks to the Financial Times that he wanted to “take the oil in Iran” and could take the country’s Kharg Island “very easily.” Kharg Island, located off the west coast of Iran, is a vital oil terminal for the country and is being eyed by the Pentagon for ground operations, though the United States insisted it would stop short of a full-scale invasion.
While Pakistan said Sunday it was ready to broker and host “meaningful talks” between Washington and Tehran to end the war, Iran’s parliament speaker Mohammad Bagher Ghalibaf said the United States was “secretly planning a ground attack.” “Higher short-term inflation expectations, volatility in the interest rate markets, and growing concerns around supply shortages/inventory and the subsequent impact on the March/April economic data series and corporate earnings is now front and centre,” noted Chris Weston, analyst at broker Pepperstone. “The Houthi’s ability to disrupt shipping through the Bab al-Mandeb strait, which accounts for roughly 12 percent of global trade, is the new key risk,” he added, referring to the waterway between Yemen and the Horn of Africa.
– Key figures at around 1030 GMT –
Brent North Sea Crude: UP 2.5 percent at $115.36 a barrel
West Texas Intermediate: UP 1.9 percent at $101.56 a barrel
London – FTSE 100: UP 0.6 percent at 10,025.85 points
Paris – CAC 40: UP 0.1 percent at 7,705.96
Frankfurt – DAX: DOWN 0.1 percent at 22,287.75
Tokyo – Nikkei 225: DOWN 2.8 percent at 51,885.85 (close)
Hong Kong – Hang Seng Index: DOWN 0.8 percent at 24,750.79 (close)
Shanghai – Composite: UP 0.2 percent at 3,923.29 (close)
New York – Dow: DOWN 1.7 percent at 45,166.64 (close)
Euro/dollar: DOWN at $1.1490 from $1.1517 on Friday
Pound/dollar: DOWN at $1.3235 from $1.3272
Dollar/yen: DOWN at 159.62 yen from 160.20 yen
Euro/pound: UP at 86.83 pence from 86.78 pence
© 2024 AFP
