Global oil prices surged on Friday as tensions in the Middle East escalated, with explosions reported near the Iranian city of Isfahan. US crude futures rose 2.1% to $84.5 per barrel, while Brent crude, the international benchmark, saw a 2% increase. The spike in oil prices was a result of concerns about a conflict escalation in the region after reports of a strike by Israel inside Iran, an incident that could intensify the crisis even further.
Israeli strikes inside Iran in response to previous attacks on its embassy in Syria have heightened tensions in the Middle East. Prime Minister Benjamin Netanyahu stated that Israel will make its own decisions regarding Iran’s actions. Analysts from ANZ noted that the situation is concerning as it could potentially impact oil supplies. Additionally, ongoing oil disruptions in other regions, including the imposition of sanctions on Venezuela’s oil industry by the US and reduced exports from Mexico, have further contributed to the uncertainty in the oil market.
As oil prices soared, gold prices also increased as investors turned to safe-haven assets. Gold futures briefly rose 1% to $2,422.4 per ounce during Asian trading hours. In contrast, the price of bitcoin dropped below $60,000 amid a decrease in risk appetite. Despite some recovery to trade at $62,406, bitcoin was still down 2% from the previous session. Stock markets in Asia mirrored this trend, with major indices like Japan’s Nikkei 225, South Korea’s Kospi, and Hong Kong’s Hang Seng Index experiencing declines.
Amidst the overall market downturn, shares of oil suppliers rose significantly. Companies like PetroChina and CNOOC in Hong Kong, and Cosmo Energy and Eneos Corp. in Tokyo, saw gains as investors sought exposure to the energy sector. S-Oil Corp in Seoul also recorded a rise in its stock price. These increases in oil supplier stocks were in contrast to the broader market trend, indicating that investors were specifically targeting energy companies as a safer investment option amid the geopolitical tensions and market volatility.
In summary, the surge in oil prices and tensions in the Middle East due to reported strikes inside Iran by Israel have caused global concern among investors. The uncertainty surrounding oil supplies, combined with ongoing disruptions in the industry, has led to heightened market volatility. This has resulted in a shift towards safe-haven assets like gold while risky assets like bitcoin have seen a decline in value. Stock markets in Asia have followed this trend, with oil supplier stocks outperforming the general market, reflecting a flight to safety by investors in response to geopolitical risks.
