Oil prices jumped and global equities slid on Monday as the Middle East crisis intensified, following the entry of Yemen’s Houthi rebels into the ongoing Iran conflict. Investors are increasingly concerned that the United States could deploy ground troops.
The conflict, now in its fifth week, escalated after Houthi rebels claimed Saturday that they had launched “a barrage of cruise missiles and drones” targeting strategic sites in Israel. This raised fears of a wider regional conflict extending to the Red Sea. In response, Saudi Arabia rerouted much of its oil exports to avoid the Strait of Hormuz, a key route for 20 percent of global crude and gas supplies, effectively closed by Tehran.
The developments pushed Brent crude near $117 a barrel, the highest since early March, with both major oil contracts rising over three percent.
Former US President Donald Trump added to market jitters in an interview with the Financial Times, stating he could “take the oil in Iran” and seize the country’s Kharg Island, a vital oil terminal, though he noted that such an action would require a temporary US presence.
While Pakistan offered to host “meaningful talks” between Washington and Tehran, Iran’s parliament speaker Mohammad Bagher Ghalibaf accused the US of “secretly planning a ground attack.”
MARKET IMPACT
Rising oil prices and the threat of an extended conflict have heightened fears of inflation, hitting global stocks. Asian markets recorded significant losses: Tokyo’s Nikkei 225 fell 4.6 percent, Seoul dropped over 3 percent, while Hong Kong, Shanghai, Sydney, Singapore, Wellington, Taipei, Jakarta, and Manila also declined sharply.
Wall Street had experienced a downturn after the US and Israel struck Iranian nuclear sites last week, with analysts warning of potential supply chain disruptions affecting crude, fertilisers, petrochemicals, and metals.
“The Houthis’ ability to disrupt shipping through the Bab al-Mandab Strait, which handles roughly 12 percent of global trade, is the new key risk,” noted Chris Weston of Pepperstone.
Skye Masters of National Australia Bank added that recent US delays in attacking Iran’s energy infrastructure were insufficient to restore investor confidence, as focus shifted to the broader economic fallout.
KEY FIGURES (As of 0230 GMT)
- West Texas Intermediate: UP 3.0% at $102.61/barrel
- Brent Crude: UP 3.2% at $116.15/barrel
- Tokyo – Nikkei 225: DOWN 4.6% at 50,936.13
- Hong Kong – Hang Seng Index: DOWN 1.9% at 24,479.15
- Shanghai – Composite: DOWN 0.7% at 3,886.86
- Euro/dollar: DOWN at $1.1506
- Pound/dollar: DOWN at $1.3249
- Dollar/yen: DOWN at 159.87 yen
- Euro/pound: UP at 86.84 pence
- New York – Dow: DOWN 1.7% at 45,166.64
- London – FTSE 100: DOWN <0.1% at 9,701.95
