Oil prices rallied and equities largely dropped Wednesday as traders assessed the latest impact for global markets from the Middle East war.
Crude futures fluctuated between gains of between two and six percent as the release of oil reserves by some countries helped offset news of attacks on commercial ships in the Gulf.
“Oil prices remain volatile and risk sentiment fragile and trading is on the headlines and rapidly evolving conflict in the Middle East,” noted Neil Wilson, Saxo UK investor strategist.
Wall Street indexes were mixed as markets digested a flat US inflation report and the uptick in oil prices.
The Dow index and Europe’s leading stock markets retreated, after Asian indices mostly closed lower.
However, Tokyo and Seoul, which have seen the widest swings since the crisis unfolded, both finished more than one percent higher.
Financial markets have experienced huge volatility since the United States and Israel began attacking Iran on February 28.
Tehran has retaliated by attacking targets across the oil-rich Gulf and effectively shutting down the crucial Strait of Hormuz, through which nearly 20 percent of the world’s oil usually transits to world markets.
Fears that the conflict could drag on -- choking off energy supplies -- sent both main crude contracts soaring on Monday to within a whisker of $120 a barrel, the highest since 2022. Gas prices also rocketed.
However, prices tanked on Tuesday after US President Donald Trump said the war “going to be ended soon”.
“Markets are likely to grow increasingly fearful over the long-term implications with each day that passes,” said Joshua Mahony, chief market analyst at Scope Markets.
“Oil prices remain the main driver of market sentiment,” he added.
Certain countries’ plans to release part of their strategic oil reserves “are undoubtedly part of a highly coordinated strategy”, France’s Finance Minister Roland Lescure said on Wednesday.
Japan and Germany announced that they plan to tap into their oil reserves to counter high energy prices, which are boosting share valuations for fossil fuel majors.
German arms maker Rheinmetall meanwhile said the Middle East war offered new business opportunities, especially for its air defence systems, as it forecast continued strong growth this year.
New attacks hit three commercial ships in the Gulf on Wednesday, officials said, with one vessel left in flames as Iran pressed its campaign against its oil-exporting neighbours.
US consumer inflation rose 2.4 percent year-on-year in February, the same increase as reported a month prior in data that met expectations.
Brent North Sea Crude: UP 2.9 percent at $90.30 per barrel
West Texas Intermediate: UP 2.6 percent at $85.59 per barrel
New York - Dow: DOWN 0.2 percent at 47,598.43
New York - S&P 500: UP 0.2 percent at 6,794.16
New York - Nasdaq Composite: FLAT at 22,804.79
London - FTSE 100: DOWN 0.8 percent at 10,328.78 points
Paris - CAC 40: DOWN 0.5 percent at 8,015.30
Frankfurt - DAX: DOWN 1.2 percent at 23,691.30
Tokyo - Nikkei 225: UP 1.4 percent at 55,025.37 (close)
Hong Kong - Hang Seng Index: DOWN 0.2 at 25,898.76 (close)
Shanghai - Composite: UP 0.3 percent at 4,133.43 (close)
Euro/dollar: DOWN at $1.1588 from $1.1612 on Tuesday
Pound/dollar: DOWN at $1.3409 from $1.3415
Dollar/yen: UP at 158.57 yen from 158.06 yen
Euro/pound: DOWN at 86.41 pence from 86.48 pence
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