Iran says it hit an oil tanker in the Gulf with a missile, setting the vessel on fire; incident yet to be confirmed
Oil prices rise, stocks drop as Middle East war stirs supply concerns. PHOTO: FILE
Oil prices pushed higher while stocks dropped on Thursday as investors tracked developments on the sixth day of the Middle East war.
An equity market rebound petered out after Asian markets closed, with European exchanges down in afternoon trading and Wall Street retreating at the opening of New York trading.
Global markets have been thrown into turmoil since the United States and Israel began strikes against Iran on Saturday, killing its supreme leader and sparking retaliatory attacks across the Gulf.
Tehran also effectively shut down the Strait of Hormuz, through which a fifth of the world’s crude oil and liquefied natural gas travel, sending prices soaring.
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While oil and gas prices dipped on Wednesday, they pushed higher on Thursday.
Brent crude, the main international contract, climbed 3.5 per cent. WTI, the main US crude contract, rose 4.5 per cent.
Brent has risen more than 16 percent since Friday, stoking fears of a fresh spike in inflation and dealing a blow to hopes for lower interest rates.
Briefing.com analyst Patrick O’Hare said the jump in oil prices was “spurred by unconfirmed reports that Iran struck a tanker off the coast of Iraq and the knowingness that activity through the Strait of Hormuz is still mostly at a standstill.”
Iran said it had hit an oil tanker in the Gulf with a missile on Thursday, setting the vessel on fire. The incident has yet to be independently confirmed.
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The war has touched as far afield as the Sri Lankan coast, where a US submarine torpedoed an Iranian warship, and Azerbaijan, which threatened retaliation after a drone hit an airport.
US President Donald Trump said this week the US Navy would protect key shipping lanes in the Middle East and that Washington was prepared to support measures aimed at safeguarding the flow of global energy supplies.
“In theory, such assurances should provide stability to markets that are sensitive to disruptions in oil supply,” said Forex.com analyst Fawad Razaqzada. “In practice, however, traders remain cautious,” he added.
National Australia Bank’s Ken Crompton said that oil traders were largely unmoved by Trump’s pledge to protect ships passing through the Strait of Hormuz, which had provided a glimmer of support Wednesday.
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“The fact is it’s just not feasible to reasonably protect all ships in the region,” he wrote, pointing out that Houthis in Yemen had carried out multiple attacks on ships in the past.
Energy intelligence firm Kpler said Wednesday oil tanker transits through the Strait had dropped by 90 percent from last week.
China, fearing supply shortages, has asked its largest oil refiners to suspend exports of diesel and gasoline, according to a Bloomberg News report.
Concerns about how long the war will last also weigh on markets, with Danish shipping giant Maersk saying it was suspending bookings in the Gulf until further notice.
In Asian equity trading, Seoul led gains, with the Kospi soaring 12 per cent at one point following an earlier collapse. Tokyo closed up almost two per cent and Hong Kong and Shanghai also advanced.
