The ongoing conflict between the U.S. and Israel against Iran is driving oil prices back up to $100 per barrel, causing global stock markets to drop on Thursday.
The S&P 500 experienced a 1.5% decline, resuming its volatile movements after a brief period of stability. The Dow Jones Industrial Average closed down by 739 points, or 1.5%, while the Nasdaq composite fell by 1.7%.
Oil prices took center stage once again, with Brent crude reaching $101.59 per barrel overnight, the international benchmark.
Fears persist that the war could disrupt oil production and transportation in the Persian Gulf for an extended period, leading to a significant spike in global inflation.
Iran has intensified its attacks in an attempt to inflict economic pain on the U.S. and Israel, targeting oil facilities in several Gulf Arab nations. The actions have effectively halted shipping through the narrow Strait of Hormuz, a crucial route for a fifth of the world’s oil supply.
To counter the war’s impact on energy markets, the International Energy Agency (IEA) announced the release of 400 million barrels of emergency oil reserves, the largest quantity in its history. The U.S. also plans to release 172 million barrels from its Strategic Petroleum Reserve next week to address soaring prices.
A video posted to social media Wednesday shows a drone strike on an oil storage facility at Oman’s Port of Salalah. CBC News verified the footage by matching the facility shown to maps and other pictures of the port, by comparing the explosion to other videos showing the facility burning and by confirming the uniform worn by a worker in the video is from a company that owns one of the ships present in the port on Wednesday.
The IEA’s decision followed a meeting in Paris where energy ministers from the Group of Seven nations discussed strategies to lower prices.
The persistent uncertainty has fueled concerns that prices could rise further, impacting global markets negatively.
According to Oxford Economics, the erratic movements in Brent crude prices suggest continued volatility due to the lack of a de-escalation timeline for the conflict and the closure of the Strait of Hormuz.
Oxford analysts warned that depending on developments, oil prices could surge to $140 per barrel.
Since the conflict began on February 28, sharp fluctuations in oil prices have triggered market fluctuations worldwide, leading to rapid changes in financial markets.
