Oil prices jumped more than 6% and stock markets around the world fell on Wednesday, after US President Donald Trump said he believed the Memorandum of Understanding with Iran “is over,” following a series of strikes across the region.Brent crude, the global oil benchmark, climbed to $78.93 a barrel shortly after 5 a.m. ET, about 6.4% higher on the day. WTI, the US benchmark, rose 6.5% to $74.99 a barrel. CNN reported.
The moves upward follow weeks of falling prices, as it looked likely the United States and Iran could reach a deal to reopen the vital Strait of Hormuz, which carried around a fifth of global oil supply before the war.
Oil prices still remain well below their war-time peaks of above $120 a barrel for Brent, but the increases could be enough to revive inflation fears.
Stock markets sold off sharply. Dow and Nasdaq futures were down 1.3% and 1.6% respectively, with S&P 500 futures 1% lower. Major equity indexes in Europe fell around 2%. In Asia, South Korea’s KOSPI finished 5.4% lower, with Japan’s Nikkei giving up 2.1.% at the close. Meanwhile, Hong Kong’s Hang Seng climbed 3%.
“Equity market sentiment is under renewed pressure from a jump in oil prices,” Neil Wilson, a strategist at investment bank Saxo, wrote in a note. “Clearly higher oil prices raises stagflation fears and weighs on the growth outlook,” he added. “Stagflation” refers to a dreaded combination of high inflation and low economic growth.
