New York: Oil prices experienced volatility on Monday while the dollar showed strength following a United States strike on Iran's nuclear facilities over the weekend. Asian markets mainly declined, whereas European stock exchanges saw slight increases as traders awaited Tehran's potential response.
According to France24.com, market analysts are closely monitoring Iran's next move to determine the impact on global oil supply. Stephen Innes of SPI Asset Management noted that the situation hinges on whether Iran opts for a symbolic response or takes more substantial action that could disrupt the Strait of Hormuz. Despite initial gains, oil prices briefly dipped before recovering slightly, as satellite images indicated continued oil flow through the Strait. Ipek Ozkardeskaya from Swissquote Bank expressed optimism that Iran might avoid extensive retaliation to protect its oil facilities and prevent regional escalation that could affect its primary oil customer, China.
Economists at MUFG have warned of significant economic consequences for Asian economies if oil prices surge, given their status as major net energy importers. Market movements reflected this concern, with Tokyo, Seoul, Sydney, Singapore, Taipei, Manila, Bangkok, and Jakarta seeing declines. However, Hong Kong, Shanghai, and Kuala Lumpur experienced gains, while London and Frankfurt saw marginal increases, and Paris remained flat.
The dollar's rise against other currencies is under scrutiny, with analysts like Sebastian Boyd from Bloomberg suggesting that the increase might be temporary if US involvement in the Middle East is perceived as short-lived. Chris Weston of Pepperstone indicated that Iran could impact global trade without closing the Strait of Hormuz by creating uncertainty that raises maritime costs, thereby affecting crude and gas supply. Meanwhile, potential headlines about trade negotiations could further influence market sentiments.
Key figures around 0900 GMT included Brent North Sea Crude at $77.14 per barrel, up 0.2 percent, and West Texas Intermediate at $73.94 per barrel, up 0.1 percent. Major indices such as Tokyo's Nikkei 225 closed down 0.1 percent, while Hong Kong's Hang Seng Index and Shanghai's Composite both closed up 0.7 percent. The dollar also saw changes against other currencies, with the euro/dollar down to $1.1458 from $1.1516 on Friday, and the dollar/yen up to 147.94 yen from 146.13 yen.