Oil prices climbed sharply on Wednesday after the United States launched strikes on Iran and reinstated trade sanctions, fuelling concerns over supply disruptions and renewed inflationary pressures while prompting investors to adopt a more cautious stance across global markets.
US crude futures rose 2.7% to US$72.40 a barrel after Washington targeted Iranian air defence, coastal surveillance, anti-ship and drone launch sites following attacks on tankers in the Strait of Hormuz. The US also withdrew a concession that had allowed Iran to continue selling oil on the global market, a move Tehran said breached the framework agreement that ended last month’s conflict.
The geopolitical developments also weighed on bond markets, with 10-year US Treasury futures falling as traders priced in the possibility of higher inflation and interest rates.
“Obviously the market doesn’t like these attacks…but it’s not full-blown panic mode,” said Jason Wong, senior strategist at BNZ in Wellington.
“The past few months showed the oil market’s resilience to a huge supply shock,” he added, noting that low global crude reserves remain a vulnerability.
Data released this week showed crude stockpiles in the US Strategic Petroleum Reserve had fallen to their lowest level since 1983, adding to concerns over supply buffers.
Equity markets also turned cautious. US futures edged lower after Wall Street retreated overnight, while Japanese stock futures pointed to a weaker open. Investor sentiment was further dampened by a sharp decline in Samsung Electronics shares despite strong earnings, suggesting appetite for technology stocks may be cooling after months of AI-driven gains.
In currency markets, the US dollar strengthened, pushing the euro back above US$1.14 while the Australian dollar eased to US$0.6925.
