Oil prices climbed sharply on Wednesday as renewed military action by the United States against Iran heightened fears of further disruptions to global energy supplies, sending Brent crude above $94 per barrel and weighing on investor sentiment.
Brent crude gained more than three per cent during trading, briefly rising above the $94 mark after US President Donald Trump declared that Washington was “not finished” with its military campaign against Iran.
The latest strikes reportedly targeted Iran’s military logistics infrastructure, according to US military officials. Iranian state media also confirmed explosions in several parts of the country, including Bushehr, home to one of the country’s nuclear power facilities.
Trump further warned that the United States would respond decisively to any attempt by Yemen’s Iran-backed Houthi rebels to blockade Saudi Arabian ports, a move analysts say could significantly disrupt global trade and energy markets.
Market analysts believe the escalating conflict has increased uncertainty over oil supplies.
Jay Hatfield, Chief Executive of Infrastructure Capital Management, said oil prices are likely to remain between $80 and $90 per barrel unless the situation worsens.
He warned that any successful blockade of the Red Sea by the Houthis could push crude prices beyond $100 per barrel, given the strategic importance of the Bab al-Mandab Strait, a major shipping route linking the Red Sea to the Suez Canal.
Despite the geopolitical tensions, technology stocks in Asia extended gains for a second consecutive session, following a positive performance on the US Nasdaq overnight.
However, initial gains faded in several markets before the close. Tokyo’s Nikkei 225 ended 0.2 per cent lower after earlier rising nearly two per cent, while South Korea’s benchmark index closed almost one per cent higher. Hong Kong’s Hang Seng Index fell 0.95 per cent, while Shanghai’s Composite Index edged up 0.1 per cent.
READ ALSO: Trump Threatens Iran As Middle East Conflict Disrupts Global Oil Supply
European markets also traded higher in early dealings, with London’s FTSE 100 rising 0.6 per cent, Paris’ CAC 40 adding 0.6 per cent and Frankfurt’s DAX gaining 0.4 per cent.
Investors are also turning attention to the earnings season, with electric vehicle maker Tesla and Google parent Alphabet scheduled to release quarterly results later on Wednesday. Technology giants Microsoft, Meta, Apple and Amazon are expected to report their earnings next week.
According to Stephen Innes of SPI Asset Management, investors are becoming more cautious about heavy spending on artificial intelligence despite continued optimism over the sector.
He noted that while increased investment could support demand for semiconductor manufacturers, it also raises concerns over cash flow, funding requirements and whether current market valuations already reflect future growth expectations.
Meanwhile, the Japanese yen remained under pressure, trading around 163 to the US dollar after touching its weakest level since 1986.
Comments by Japan’s Finance Minister, Satsuki Katayama, that authorities were prepared to take “appropriate and bold action” to stabilise the currency had little immediate impact on foreign exchange markets.
By mid-morning trading, Brent crude was up 3.2 per cent at $93.92 per barrel, while US benchmark West Texas Intermediate rose 3.5 per cent to $87.32 per barrel.