European oil prices surged on Friday, as the war in Iran threatened to upend energy markets for a prolonged period.
The price of Brent crude - the European benchmark - passed $90 per barrell for the first time since 2024 amid reports Kuwait had started to cut production at some of its oil fields. Natural gas prices also rose again after Qatar - among the biggest producers globally - said it would not resume production until there was a full ceasefire.
European shares meanwhile fell across the Continent, with the benchmark Stoxx Europe 600 Index falling 1.4 per cent. In Dublin the Iseq Overall Index was off 1.2 per cent by 2pm.
Earlier, Asian stocks erased earlier declines on the final trading day of a volatile week, even as the Middle East conflict showed little sign of easing. Gold and silver rose.
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Some relief for regional shares came in the form of a weaker dollar and a drop in crude prices as the US weighed a range of options to address the spike in energy costs amid the war in Iran.
Gains in Chinese technology shares also helped the MSCI Asia Pacific Index retrace an earlier decline of as much as 1.2 per cent. The Bloomberg Dollar Spot Index fell 0.1 per cent.
Equity-index futures for the US and Europe also rose, indicating some improvement in sentiment in stock markets. Attention will later turn to the crucial US jobs report, which may offer fresh clues on the path of Federal Reserve interest rates.
“The market looks surprisingly resilient,” said Naoki Fujiwara, senior fund manager at Shinkin Asset Management. “Worries over Iran remain, but investors seem to think this won’t be a long-term conflict.”
Even so, Asia’s benchmark stock index has dropped 6.5 per cent since the Iran war began, with MSCI’s regional gauge set for its worst week since March 2020. The dollar is poised for its best week since November 2024. Crude oil headed for the biggest weekly surge since 2022.
Sharp swings across asset classes have unsettled traders struggling to price risk as headlines from the US-Israeli offensive against Iran ricochet through markets. Investors fear renewed inflation if disruptions in the Strait of Hormuz curb oil flows, while equity valuations remain a concern after a rally fuelled by bets on artificial intelligence.
Iran launched a fresh wave of missile and drone strikes across the Gulf on Thursday evening, with attacks reported in the United Arab Emirates, Bahrain, Qatar and Kuwait. Iranian foreign minister Abbas Araghchi told NBC News that his country hadn’t asked for a ceasefire and had no intention of negotiating.
The US also remained defiant. Trump told Axios he should be involved in selecting Iran’s next leader, the outlet reported, citing an interview with the president.
“What matters now is whether the war will last days, weeks, or longer,” said Marco Oviedo, senior strategist at XP Investimentos. The possibility that the conflict doesn’t last long “remains the base case, and that the US is winning the battle. But Iran’s refusal to back down is keeping things tense,” he said.
Meanwhile, the US issued a general license to allow for some Russian oil sales to India, giving the Asian nation more options to purchase fuel as the war on Iran leads to a spike in global prices.
Stocks have whipsawed across Asia and emerging markets this week. South Korea, for example, suffered its worst crash ever on Wednesday, only to bounce back on Thursday. The benchmark Kospi Index — a poster child for AI investments — fell 1.1 per cent on Friday, the second-best-performing market in the world this year.
“Overall sentiment remains weak,” said Anna Wu, cross-asset investment strategist at Van Eck Associates in Sydney. “Long-term investors should stay calm while navigating the volatility even now. The long‑term case for emerging market equities remains intact.”
Market attention later will shift to the US payrolls report. Before that, data showed jobless claims are settling near some of the lowest levels in the last year amid a low-firing environment.
The employment report due Friday is expected to show hiring moderated last month after a strong reading in January, and unemployment held steady.
“The stronger the better given the increase in inflation expectations due to energy prices,” the JPMorgan Market Intelligence desk led by Andrew Tyler said. “A weaker number will increase rate cut expectations, but the risk is stagflation in the near term.” – Bloomberg
