New York: Oil prices fluctuated on Monday following the United States’ recent strike on Iran’s nuclear facilities over the weekend, which also led to a strengthening of the dollar. Asian markets mostly saw declines, while European stock markets experienced marginal gains as traders awaited Iran’s potential response.
According to France24.com the market’s focus remains on Iran’s response, with concerns over whether it will engage in symbolic gestures or take significant actions that could disrupt the Strait of Hormuz. Stephen Innes of SPI Asset Management emphasized the importance of Iran’s next move in determining market reactions. Initially, oil prices rose; however, they later retraced those gains, briefly dipping into negative territory before stabilizing.
Senior analyst Ipek Ozkardeskaya from Swissquote Bank noted that satellite imagery indicates continued oil flow through the Strait, which has contributed to the subdued market response. She expressed optimism that Iran might refrain from full-scale retaliation to protect its oil infrastructure and avoid broader conflict that could impact its major oil customer, China. However, she warned that if tensions escalate, US crude prices could surpass $100 per barrel, with West Texas Intermediate trading at approximately $74 per barrel on Monday.
MUFG economists cautioned that an oil price shock could severely impact Asian economies, which are significant net energy importers. Major Asian markets including Tokyo, Seoul, Sydney, Singapore, Taipei, Manila, Bangkok, and Jakarta saw declines, whereas Hong Kong, Shanghai, and Kuala Lumpur recorded gains. European markets such as London and Frankfurt showed slight increases, while Paris remained stable.
The dollar’s appreciation against other currencies raised questions among analysts about its longevity. Bloomberg’s Sebastian Boyd suggested that if the market perceives US involvement in the Middle East as temporary, the dollar’s upward trend might reverse. Chris Weston from Pepperstone highlighted that Iran could cause economic disturbances globally without resorting to closing the Strait of Hormuz by influencing maritime costs and crude supply.
While the Middle East remains a primary focus for US policy, Weston noted that developments in trade negotiations could further exacerbate market anxieties.
Key market figures at approximately 0900 GMT included Brent North Sea Crude rising by 0.2 percent to $77.14 per barrel and West Texas Intermediate increasing by 0.1 percent to $73.94 per barrel. The Nikkei 225 in Tokyo fell by 0.1 percent, while the Hang Seng Index in Hong Kong and Shanghai Composite both rose by 0.7 percent. London’s FTSE 100 saw a slight gain of 0.1 percent, and the Dow in New York increased by 0.1 percent.