Global markets jittery as middle east tensions drive oil prices higher

NEW YORK: Rising tensions in the Middle East and uncertainty surrounding the Strait of Hormuz have triggered volatility across global financial markets, pushing oil prices higher and weighing on equities.

During early Asian trading, Brent crude surged by around 7% to $96.85 per barrel, reflecting concerns over potential supply disruptions. At the same time, S&P 500 futures declined by 0.9%, raising fears of a broader downturn in global stock markets.

Currency markets also came under pressure, with the euro slipping 0.3% to $1.1735, while the Japanese yen weakened to 158.95 against the US dollar, which strengthened as investors moved towards safe-haven assets.

According to media reports, Iran has rejected a fresh offer for peace talks with the United States. The development follows remarks by US President Donald Trump, who warned of potential further action against Iran and indicated plans to send representatives to Pakistan for discussions.

Tensions have also intensified following reports of a US seizure of an Iranian cargo vessel, further escalating concerns in the region.

Market analysts say the Strait of Hormuz remains the most critical flashpoint, as a significant portion of global oil and gas shipments passes through the narrow waterway. Any disruption or even speculation regarding its closure can have immediate effects on global energy prices.

Michael Brown, senior research strategist at Pepperstone, noted that while tensions remain high, markets are also factoring in the possibility of ongoing back-channel contacts between Washington and Tehran. However, he warned that a complete breakdown in talks could put additional pressure on global markets.

Recent developments have reversed last week’s positive trend, when lower oil prices and hopes for de-escalation had supported global equities and stabilised bond markets.

Experts say investors are increasingly cautious, shifting towards safer assets, with the strengthening US dollar reflecting heightened risk aversion.

Analysts warn that if tensions persist, oil prices could rise further, potentially impacting global economic growth, energy supply chains and inflation.