Brent Soars, Hormuz Shutdown Shakes Energy and Stocks
Crude oil prices surged above US$100 per barrel for the first time since 2022, while stocks weakened as escalating hostilities in the Middle East tightened pressure on shipping and energy infrastructure. Amid the risk-off wave, the dollar strengthened as investors braced for renewed volatility.
Brent futures rose about 15% to around US$107 per barrel, extending the previous week's strong rally. Markets now face the prospect of further volatility as the conflict involving Iran enters its second week, with major producers restricting output and traffic through the Strait of Hormuz—a vital oil trade route—effectively halted.
Rising energy prices prompted investors to reduce exposure to riskier assets and shift to safer instruments. The dollar strengthened against all G-10 currencies, while inflationary pressures from higher oil prices pushed up yields in some bond markets. At the same time, US equity index futures weakened and Asian stocks also declined. Interestingly, pressure is also spreading to some hedge assets like gold and silver, indicating the market is in an aggressive deleveraging phase.
Several market participants believe the risk focus is no longer solely on the "closed" Hormuz, but rather on supply disruptions spreading deeper within the region. Dave Mazza of Roundhill Financial believes this shift has the potential to encourage already nervous investors to reduce risk further, as the implications could directly impact global energy supply availability and costs.
From a geopolitical perspective, attacks and retaliatory threats continue to escalate: Iran has escalated attacks on neighboring countries, Israel has reportedly struck energy targets in Tehran, and President Donald Trump has signaled broader targeting options. On the supply side, the United Arab Emirates and Kuwait have begun reducing production, reinforcing concerns that energy tightening could present a new dilemma for the market: inflationary risks from expensive oil on the one hand, and signs of cooling in the US labor market, which could strengthen the case for monetary easing on the other. (alg)
Source: Newsmaker.id
