Oil prices rise amid Asian market decline and US Iran policy

US President Donald Trump’s speech on Wednesday triggered a surge in oil prices, with Brent crude futures rising $6.33 and US West Texas Intermediate crude CLc1 futures increasing $5.28.

The price increase followed an earlier decline of over $1 in both benchmarks prior to the speech. Iran’s closure of the Strait of Hormuz has disrupted about one-fifth of global oil and liquefied natural gas (LNG) supplies, causing a significant impact on energy markets.

Trump stated that the US would continue its attacks on Iran without committing to a specific timeline to end the war. He also claimed that the US military had nearly achieved its goals in the conflict, which is expected to conclude within two to three weeks.

The news led to a decline in Asian stocks, with the MSCI gauge of EM Asia equities falling 2.3 percent and regional currencies weakening by 0.2 percent. South Korea’s main stock market, the Korea Composite Stock Price Index (KOSPI), dropped 4.2 percent after initially gaining nearly 2 percent.

South Korean President Lee Jae Myung urged parliament to pass a supplementary budget of 26.2 trillion won ($17.3 billion) to shore up the economy during the energy security threat caused by the Middle East crisis. Other markets in Indonesia, Taiwan, China, Hong Kong, and Singapore also declined, with losses ranging from 0.8 percent to 1.4 percent.

Al Jazeera’s Patrick Fok reported that Iran had previously reached out to the US directly, providing an off-ramp for Washington, which helped lift Wall Street stocks overnight. However, uncertainty is now returning to markets, with some analysts predicting a quick bounce-back if there is any resolution to the price surge.

Source: Al Jazeera