Oil Prices Surge as Geopolitical Tensions Escalate
FRANKFURT, Germany (AP) — A significant uptick in oil prices and a subsequent drop in stock markets marked Friday’s trading as Israel targeted Iranian nuclear and military sites, raising fears of an all-out conflict between the two nations. U.S. crude oil prices soared by 7.3%, reaching $72.91 per barrel, while Brent crude rose 6.67% to $74.15.
Richard Joswick from S&P Global Commodity Insights noted that while oil prices are likely to rise initially, the key factor will be the impact on exports. If Iran retaliates broadly, price risk could escalate, although it currently relies on China as its primary oil customer.
In response to the rising tensions, U.S. futures for both the S&P 500 and Dow Jones dropped by 1.2%. European markets also suffered, with Germany’s DAX diving 1.4%. Concurrently, U.S. Treasury yields fell, and the dollar gained against other currencies as investors sought safety in bonds amidst uncertainty.
While Asian markets showed a similar downward trend, analysts suggest a swift recovery is expected due to limited exposure to the conflict and strengthening ties with unaffected regional powers. The Federal Reserve’s next meeting on interest rates looms, with expectations of maintaining current levels as traders remain cautious about inflation and economic growth.
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