Oil prices jump, stocks drop as Middle East war flares
World oil prices climbed on Tuesday, once more closing in on US$100 a barrel, and stock markets mostly retreated owing to a flare-up in the Middle East war. The latest jump in oil prices came as the Houthis said Saudi Arabia retaliated with strikes on Tuesday after the group targeted oil facilities as part of an effort to seize territory near the Bab al-Mandeb Strait, an increasingly important…
On Tuesday, the price of oil surged, nearing the US$100 per barrel mark, while stock markets experienced a general decline due to heightened tensions in the Middle East. The Houthis claimed that Saudi Arabia retaliated with strikes after the group targeted oil facilities in an attempt to seize control of the Bab al-Mandeb Strait, a critical shipping route for Saudi oil.
Following the conflict, the price of Brent crude oil reached $97.92 per barrel. U.S. stock indices largely underperformed throughout the day, with the S&P 500 declining by 0.6 percent. Analysts noted that escalating geopolitical tensions in the Middle East have dimmed investor confidence, as rising oil prices highlight inflation risks for fixed-income investors.
The Federal Reserve may consider raising interest rates, which could further impact stocks. Meanwhile, average diesel prices in the United States reached a record high on Monday, and U.S. Treasury bond yields climbed as concerns over inflation and heavy issuance of corporate and government debt grew. Higher interest rates could eventually affect equities as well, according to Natalia Lojevsky, a managing director at CIFC Asset Management. The S&P 500 closed at 7,674, the Dow fell to 52,786, and the Nasdaq dipped to 26,421.
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