Crude oil prices soared by over 7% after a sharp escalation in the conflict between Israel and Iran raised fears of major disruptions in oil exports from the Middle East. The rise marked the biggest single-day gain in oil prices since Russia invaded Ukraine in 2022.
Brent crude futures climbed $4.87, or 7.02%, to settle at $74.23 per barrel. Earlier in the day, prices had spiked by more than 13% to hit $78.50, the highest level since January 27. For the week, Brent posted a strong 12.5% gain.
Escalating tensions between Israel and Iran sparked fears of severe supply disruptions. The threat to the Strait of Hormuz, a key global oil artery, looms large. Supporting the price rally, US crude inventories fell more than expected, signalling robust demand. Additionally, weaker US inflation data reinforced expectations of a Fed rate cut by September, potentially lifting future oil demand.
As oil prices spiked, global stock markets dropped sharply. The Dow Jones Industrial Average fell 769 points, or 1.8%. The S&P 500 dropped over 1%, and the Nasdaq lost 1.3%, according to Reuters. At the same time, gold prices rose, and both the U.S. dollar and Swiss franc strengthened, which generally happens during times of geopolitical uncertainty.
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