GLOBAL OIL PRICE SURGE, MARKET TURMOIL -- ECONOMIC FALLOUT OF US-ISRAEL STRIKES ON IRAN

BEIJING, March 9 (Bernama-Xinhua) -- The strikes launched by the United States and Israel against Iran have triggered a sharp spike in global oil prices, thereby sending shockwaves across the share market and adding to global economic instability, reported Xinhua.

US crude oil prices surged rapidly over the US$100 threshold in the wake of rounds of strikes, hitting their highest point since the onset of the Ukraine crisis in 2022. The price for Brent crude was trading at US$114.78 a barrel and US benchmark crude shot to nearly US$114.00. Both were more than 20 per cent above their closing prices on Friday.

The latest price hikes cap a volatile week that saw US crude soar by 36 per cent and Brent climb 28 per cent. Markets are reacting to intensifying concerns that ongoing US-Israel military strikes on Iran threaten to cripple regional oil output and choke off critical shipping routes.

Key factors include the blockade of the Strait of Hormuz, a vital chokepoint for global oil trade, and production cuts from major oil exporters like Iraq, Qatar, Kuwait, and the UAE, caused by limited storage and refining capacity. Kuwait's National Petroleum Company has already announced production cuts due to ongoing security threats and disruptions to shipping.

Despite efforts by other nations to boost supply, analysts predict that the oil market will continue facing significant shortages, with geopolitical risk premiums expected to stay elevated. This surge in oil prices adds further strain to a struggling global economy.

Surging oil prices have triggered turbulence across global financial markets, sending major stock indices into sharp decline. In Asia, the Tokyo Stock Exchange saw heavy losses on Monday, with the Nikkei 225 plunging over 7 per cent. The South Korean stock market also suffered, with the KOSPI 200 futures index falling by more than 6 per cent, triggering a temporary halt to automated selling.

European markets faced a parallel selloff as panic spread across the continent, with EUROSTOXX 50 futures and DAX futures both sliding 3.2 per cent, and FTSE futures dropping 1.7 per cent.

In the United States, stock markets reacted with notable volatility, as S&P 500 futures shed 2.1 per cent and Nasdaq futures dived 2.5 per cent. Investors are increasingly concerned that the surge in oil prices will lead to higher production costs and rising inflation, which could further undermine economic growth as the recovery from the pandemic remains fragile.

The current market volatility highlights escalating concerns over the long-term structural damage caused by the US-Israel strikes on Iran. With the global economy still precarious, this escalation risks stalling nascent recovery trends, creating ripple effects that will resonate well outside the Middle East.  

--BERNAMA-XINHUA