Global oil prices surged on Monday as escalating tensions in the Middle East, marked by the anniversary of the Hamas attacks on Israel, heightened fears of further conflict.
Stock markets displayed mixed reactions, with Wall Street seeing a retreat while major indices in Europe and Asia diverged.
The boost in oil markets comes as Brent North Sea crude, the international benchmark, approached the $80 per barrel mark—its highest level since late August. Geopolitical concerns over Israel's potential retaliation against Iran, following missile attacks last week, have raised the specter of a broader regional war, adding to the volatility in oil futures.
On the other hand, stock markets reflected mixed sentiments. Major indices in New York pulled back from Friday's gains, which were driven by stronger-than-expected nonfarm jobs data from the United States. The upbeat jobs report signaled the resilience of the US economy but also sparked concerns over future interest rate cuts from the Federal Reserve. Analysts now anticipate a more modest quarter-point cut instead of the previous aggressive moves.
Meanwhile, in Europe, Germany’s economic troubles weighed heavily on the Frankfurt stock exchange. Official data revealed a sharper-than-expected fall in industrial orders for August, raising fears of an impending recession. However, London's and Paris’s markets saw modest gains in afternoon trading.
In Asia, Tokyo and Hong Kong markets performed strongly. The Tokyo market benefited from a weakened yen, giving an edge to Japanese exporters, while Hong Kong extended its rally amid China's plans to revive growth through interest-rate cuts and support for its struggling property sector. Shanghai remained closed due to a public holiday.
Oil Markets on a 'Wild Ride'
The current volatility in oil markets is driven by a combination of geopolitical risks, Chinese economic stimulus, and shifting strategies within OPEC+. Analysts noted the potential reversal of output cuts by the oil cartel, adding further uncertainty. Stephen Innes, an independent market analyst, described the situation as "a wild ride" amid these intertwined factors.
As tensions continue to simmer in the Middle East and demand signals from China remain unclear, global markets brace for further turbulence in the days ahead.
