Oil price jumps and markets slide after Trump warning to Iran | Oil
Oil prices rose and stocks fell after Donald Trump promised in a televised speech to hit Iran “extremely hard” in the coming weeks.
Brent crude oil prices rose more than 7% to surpass $108.50 a barrel on Thursday morning, reversing a decline from Wednesday, when hopes of easing tensions in the Iran war pushed the international benchmark below the $100-a-barrel mark.
Meanwhile in London, the FTSE 100 opened 0.68% lower, paring some of the gains from the previous session, when the blue-chip index had its best day in almost a year. The decline comes despite a rise in oil prices supporting the prices of fossil fuel companies listed on the FTSE; BP was up 2.9% and Shell was up 2%.
In Frankfurt, Germany’s Dax share index fell 1.5%, France’s Cac 40 index fell 1.35% and Italy’s FTSE Mib index fell 1.2%.
Government borrowing costs were also on the rise; The yield on 10-year UK bonds (or the interest rate issuers must pay) rose four basis points to 4.886%. The two-year UK bond yield rose six basis points to 4.36%, reflecting growing fears that inflation will rise due to higher energy costs.
IG’s chief market analyst Chris Beauchamp said investors were banking on the effects of long delays in oil supplies from the Gulf after Trump failed to provide any guidance on how the US-Israeli conflict with Iran might end.
“In what may be the most dramatic April Fool’s joke of recent years, Donald Trump did none of the expected in his speech. Instead of ‘no more war,’ he said ‘no, more war!'” Beauchamp said. More severe attacks are expected and new attacks on power plants are being warned,” Beauchamp said.
“This puts the markets back to where they were last week, and now we have to price hundreds of millions of barrels of oil that will not come to market in the near future… markets are back to economic disaster pricing.”
Stocks in Asia also suffered; Japan’s Nikkei index fell 2.4% and China’s CSI 300 index fell 1.36%. South Korea’s Kospi index, which is particularly sensitive to the crisis, lost 4.8% of its value.
Meanwhile, the US dollar gained almost 0.5% against a basket of major currencies as investors fled to the greenback in search of safe-haven assets. The move pushed the pound down nearly a cent to $1.321, reversing Wednesday’s gains.
Market moves began to hurt consumers, including in the UK, as the Bank of England warned on Wednesday that 1.3 million more homeowners were likely to see their monthly mortgage payments rise due to financial shocks from the conflict in Iran.
Data released by the RAC on Thursday showed rising petrol and diesel prices rose by a record amount in March as rising oil prices translated into higher prices at the pumps for motorists.
The report stated that the average price of a liter of unleaded gasoline increased by 20 pence from 132.83 pence on March 1 to 152.83 pence by the end of the month. This surpasses the previous all-time biggest monthly increase of 16.6 points recorded in June 2022, following Russia’s invasion of Ukraine.
