Oil prices surged on Thursday after reports that the United States could launch fresh attacks on Iran before next month’s midterm elections, raising fears of further supply disruptions in an already tense market.
The rally eased slightly after US President Donald Trump ruled out hitting Iran before the November vote, saying Washington was holding “productive discussions” with Tehran.
Brent North Sea crude, the international benchmark, rallied to as high as $105.88 a barrel before retreating to $104.28, up 4.1 percent. The main US contract, West Texas Intermediate, reached as high as $93.20 per barrel but eventually closed at $91.49, up 3.6 percent.
The Atlantic magazine reported that the White House had asked the Pentagon to draw up options for hitting sites in Iran ahead of the midterm elections on November 3.
But with Trump’s Republican party standing a chance of losing both houses of Congress, an escalation in the US-Iran conflict could put even more pressure on the president. Americans are already battling record-high diesel prices.
Following the surge in energy costs, Trump wrote on his Truth Social platform on Thursday that “we will not be attacking Iran at any time prior to the Midterm Elections.”
Still, oil markets are reacting not only to nervousness over Trump’s plans but to “increased Iranian attacks on traffic through the Strait of Hormuz,” said Andy Lipow of Lipow Oil Associates. Another concern, he said, is “Hurricane Isaias coming through the Gulf of Mexico and shutting in a significant amount of oil production.”
Meanwhile, Yemen’s Houthis took aim at Riyadh airport with missiles and warned staff at oil facilities in Saudi Arabia to leave to avoid being targeted as hostilities escalate.
“The renewed rise in oil prices is intensifying inflation concerns and adding to upward pressure on bond yields,” said Fawad Razaqzada, an analyst at Forex.com. Yields on government bonds have recently touched highs unseen in more than 20 years as investors fear sustained inflation will force central banks to keep interest rates higher for longer, slowing economic growth and weighing on equity valuations.
The surge in oil prices weighed on stock markets. Wall Street’s main indexes mostly closed lower, with the Dow up 0.1 percent at 51,231.64 points, the S&P 500 down 0.5 percent at 7,765.36 and the Nasdaq Composite down 1.3 percent at 27,193.34. Europe’s main markets finished the day in the red, including London, although higher oil prices benefited energy majors.
Asia’s leading stock markets tracked Wednesday’s losses on Wall Street, where technology firms pulled back from recent gains. Shares in Samsung slid as the South Korean titan forecast a huge increase in quarterly profit that nonetheless failed to meet market expectations.
On Wall Street, shares in SpaceX slid 4.2 percent following a Financial Times report that Elon Musk’s firm is aiming to raise $40 billion in bank loans and debt to further its purchases of AI chips from Nvidia. A separate Financial Times report that OpenAI is bringing in about $20 billion less in annualized revenue than investors were led to believe also weighed on markets.
“It raises the question about all AI companies,” said Adam Sarhan of 50 Park Investments. “If OpenAI is missing revenue estimates, what does that mean for the other AI companies?”
Source: Channels Television (AFP report). This story was rewritten from their original report.
Image: Stock photo, used as generic illustration of the oil industry. Not a photo from the story.
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