Oil and Gold Prices Surge as Stock Markets Decline Following Israel's Attacks on Iran
The escalation of conflict in the Middle East leads to significant fluctuations in global markets.
The recent military strikes by Israel against targets in Iran have resulted in a substantial increase in oil and gold prices, alongside a marked decline in stock markets worldwide.
Brent crude oil prices saw an increase of over 7%, briefly surpassing $75 (£55) per barrel, marking the highest level since April.
The surge in oil prices reflects concerns over potential disruptions to global oil supply amid rising geopolitical tensions in a region central to oil production.
Stock indices fell sharply on Wall Street, with the Dow Jones Industrial Average reporting a 1.8% decrease, the S&P 500 down by 1.1%, and the Nasdaq Composite dipping by 1.3%.
Airlines, such as Delta, United, and American Airlines, experienced declines in their stock prices due to fears regarding rising fuel costs resulting from potential oil supply issues.
The aviation industry has reacted to the military escalation by rerouting flights to avoid airspace over the struck regions.
In London, International Airlines Group (IAG), the owner of British Airways, was the largest loser on the FTSE 100 index, closing down 3.7%, while easyJet shares dropped 2.7%.
Conversely, shares in defense contractor BAE Systems rose nearly 3%, reflecting apprehensions regarding the potential for an expanded conflict.
In the United States, military suppliers such as Lockheed Martin, Northrop Grumman, and RTX saw their share prices increase, while oil giants BP and Shell experienced stock rises of nearly 2% and over 1%, respectively.
Gold prices rose by approximately 1% to reach $3,426 an ounce, nearing the record high of $3,500 reached earlier in April, as investors shifted towards safer assets in light of the escalating tensions.
Asian markets demonstrated similar trends, with Japan’s Nikkei index declining 1.3%, South Korea’s Kospi falling 1.1%, and Hong Kong’s Hang Seng index down 0.8%.
Major European markets, including Germany, France, Italy, and Spain, all closed at least 1% lower.
The FTSE 100 index in London ended the session down 34 points at 8,850, marking a 0.4% dip from Thursday’s record closing.
Israel stated that its military action constituted a “pre-emptive strike” related to concerns over Iran’s nuclear program, announcing a state of emergency as its military reported that Tehran had retaliated with drones.
U.S. officials, including Secretary of State Marco Rubio, characterized Israel’s military actions as a “unilateral action,” clarifying that Washington was not directly involved.
Investor cautiousness has driven the yield on 10-year U.S. Treasury notes to a one-month low of 4.31%.
Derren Nathan, head of equity research at a wealth management firm, highlighted concerns not only about potential disruptions to Iranian oil exports but also about possible impacts on shipping routes, particularly through the Strait of Hormuz, which is critical for global oil transport, accounting for approximately 20% of worldwide oil flows.
There are escalating concerns within the maritime supply industry regarding the continuation of hostilities between Israel and Iran, which could lead to a de facto closure of the Strait of Hormuz, affecting the routings for vessels entering the Gulf region.
The UK Department for Transport has issued advisories regarding navigation through the Red Sea and Gulf of Aden, urging caution for UK-flagged ships.
The Greek shipping association has called for transparency regarding vessels transiting the Strait of Hormuz.
Any disruption of the Strait of Hormuz could necessitate rerouting services, leading to increased reliance on ports along the Indian west coast to connect shipping needs between the Far East and the Indian subcontinent, according to shipping analytics experts.
A significant resurgence of container traffic in the Red Sea appears increasingly unlikely, as demonstrated by previous incidents where vessels were diverted after attacks by Iranian-affiliated Houthi rebels in Yemen, resulting in extended shipping times and elevated freight costs.
Energean, a UK gas producer, announced on Friday a temporary halt to production and activities at its facility off the northern coast of Israel, complying with a directive from the Israeli Ministry of Energy and Infrastructure, which cited the ongoing geopolitical tensions as the basis for the suspension.
Brent crude oil prices saw an increase of over 7%, briefly surpassing $75 (£55) per barrel, marking the highest level since April.
The surge in oil prices reflects concerns over potential disruptions to global oil supply amid rising geopolitical tensions in a region central to oil production.
Stock indices fell sharply on Wall Street, with the Dow Jones Industrial Average reporting a 1.8% decrease, the S&P 500 down by 1.1%, and the Nasdaq Composite dipping by 1.3%.
Airlines, such as Delta, United, and American Airlines, experienced declines in their stock prices due to fears regarding rising fuel costs resulting from potential oil supply issues.
The aviation industry has reacted to the military escalation by rerouting flights to avoid airspace over the struck regions.
In London, International Airlines Group (IAG), the owner of British Airways, was the largest loser on the FTSE 100 index, closing down 3.7%, while easyJet shares dropped 2.7%.
Conversely, shares in defense contractor BAE Systems rose nearly 3%, reflecting apprehensions regarding the potential for an expanded conflict.
In the United States, military suppliers such as Lockheed Martin, Northrop Grumman, and RTX saw their share prices increase, while oil giants BP and Shell experienced stock rises of nearly 2% and over 1%, respectively.
Gold prices rose by approximately 1% to reach $3,426 an ounce, nearing the record high of $3,500 reached earlier in April, as investors shifted towards safer assets in light of the escalating tensions.
Asian markets demonstrated similar trends, with Japan’s Nikkei index declining 1.3%, South Korea’s Kospi falling 1.1%, and Hong Kong’s Hang Seng index down 0.8%.
Major European markets, including Germany, France, Italy, and Spain, all closed at least 1% lower.
The FTSE 100 index in London ended the session down 34 points at 8,850, marking a 0.4% dip from Thursday’s record closing.
Israel stated that its military action constituted a “pre-emptive strike” related to concerns over Iran’s nuclear program, announcing a state of emergency as its military reported that Tehran had retaliated with drones.
U.S. officials, including Secretary of State Marco Rubio, characterized Israel’s military actions as a “unilateral action,” clarifying that Washington was not directly involved.
Investor cautiousness has driven the yield on 10-year U.S. Treasury notes to a one-month low of 4.31%.
Derren Nathan, head of equity research at a wealth management firm, highlighted concerns not only about potential disruptions to Iranian oil exports but also about possible impacts on shipping routes, particularly through the Strait of Hormuz, which is critical for global oil transport, accounting for approximately 20% of worldwide oil flows.
There are escalating concerns within the maritime supply industry regarding the continuation of hostilities between Israel and Iran, which could lead to a de facto closure of the Strait of Hormuz, affecting the routings for vessels entering the Gulf region.
The UK Department for Transport has issued advisories regarding navigation through the Red Sea and Gulf of Aden, urging caution for UK-flagged ships.
The Greek shipping association has called for transparency regarding vessels transiting the Strait of Hormuz.
Any disruption of the Strait of Hormuz could necessitate rerouting services, leading to increased reliance on ports along the Indian west coast to connect shipping needs between the Far East and the Indian subcontinent, according to shipping analytics experts.
A significant resurgence of container traffic in the Red Sea appears increasingly unlikely, as demonstrated by previous incidents where vessels were diverted after attacks by Iranian-affiliated Houthi rebels in Yemen, resulting in extended shipping times and elevated freight costs.
Energean, a UK gas producer, announced on Friday a temporary halt to production and activities at its facility off the northern coast of Israel, complying with a directive from the Israeli Ministry of Energy and Infrastructure, which cited the ongoing geopolitical tensions as the basis for the suspension.
