The ongoing conflict between the U.S., Israel, and Iran is causing oil prices to surge, reaching $100 USD per barrel, while global stocks experienced declines on Thursday.
The S&P 500 dropped 1.5%, resuming volatile movements after a period of relative stability. The Dow Jones Industrial Average closed 739 points lower, down 1.5%, and the Nasdaq composite fell by 1.7%.
The focal point of the turmoil was the oil market, where the price for a barrel of Brent crude, the global benchmark, spiked to $101.59 USD overnight.
Concerns persist that the conflict may disrupt oil production and transportation in the Persian Gulf for an extended period, potentially leading to a significant inflationary impact on the world economy.
Iran has intensified its attacks targeting oil facilities and refineries in several Gulf Arab nations, aiming to create economic pressure on the U.S. and Israel to end the war. This has resulted in a halt of cargo traffic through the strategically vital Strait of Hormuz, a critical route for a fifth of the world’s oil shipments.
In response to the crisis, the International Energy Agency (IEA) announced the release of 400 million barrels of oil, the largest emergency reserve release in its history, to mitigate the war’s impact on energy markets.
The U.S. also revealed plans to release 172 million barrels from its Strategic Petroleum Reserve in the following week to counter 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 of energy ministers from the Group of Seven (G7) nations in Paris, which includes Canada, the U.S., France, Italy, Japan, Germany, and Britain, focused on strategies to stabilize prices.
Despite these efforts, ongoing uncertainties have fueled speculations that prices could rise further, impacting global markets negatively.
An Oxford Economics report highlighted the significant volatility in Brent crude prices in recent days, attributing it to the lack of clarity on de-escalation of the conflict and the reopening of the closed Strait of Hormuz.
The report suggested that based on unfolding events, oil prices might potentially reach as high as $140 per barrel.
Since the conflict began on February 28, sharp fluctuations in oil prices have led to erratic movements in financial markets worldwide, at times changing by the hour.
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