Brent crude oil prices rose 10% to nearly $80 a barrel due to tensions in the Middle East.
World oil prices and gold prices both surged on March 2nd, while global stock markets fell amid inflationary pressures and concerns about supply chain disruptions.
On Monday's trading session (March 2nd), world oil prices surged due to concerns about energy supply from the Middle East. This volatility boosted the US dollar and gold prices, while putting pressure on global stock markets, leading to sharp declines.
Oil and gold prices both rose sharply.
Specifically, Brent crude oil prices rose by approximately 10%, reaching $79.90 per barrel, at one point touching $82.00. Similarly, US crude oil prices also increased by 8.2%, to $72.64 per barrel. Disruptions to energy supplies from conflict hotspots are believed to be the direct cause of this price surge.
Besides oil, gold – a safe-haven asset – recorded a 2.6% increase, reaching $5,413 per ounce. Michael Langham, emerging market economist at Aberdeen Investments, commented: "In the short term, disruptions to global energy supplies are significant, which clearly increases the risk to oil prices." He also warned that a prolonged rise in oil prices could trigger inflationary pressures, directly impacting the costs for businesses and consumers.
Global stock markets plunged into the red.
In contrast to the energy rally, global stock markets were negatively impacted. Europe's STOXX 600 index fell 1.7%, while the Asia-Pacific index (excluding Japan) dropped 1.8%. In the US, S&P 500 futures also lost 1.5% of their value.
Banking and airline stocks were hit hardest due to concerns about economic growth and fuel costs. In Europe, banks fell 3.6%, while airlines dropped 5%. Notably, in the Middle East, the UAE and Kuwait had to temporarily close their stock markets due to exceptional circumstances.
However, energy stocks maintained impressive growth momentum. In Europe, the energy sector index rose 4%, setting a new record high. Shares of two major companies, BP and Shell, both increased by nearly 6%.
The US dollar strengthens, bond yields fluctuate.
In the foreign exchange market, the US dollar asserted its position as the strongest appreciating currency, even when compared to other safe-haven assets such as the Swiss franc and the Japanese yen. The dollar rose 0.6% against the Japanese yen (to 157 yen) and 0.5% against the Swiss franc (to 0.7733 francs). Conversely, the euro and the British pound both fell by around 1%.
The bond market saw a slight increase in the yield on 10-year US Treasury bonds to 3.969%. Although it had briefly touched an 11-month low of 3.926% as investors sought safety, yields reversed course as the market focused on inflation risks. Higher oil prices may make the Federal Reserve less likely to cut interest rates in the near future.
On the supply side, the OPEC+ alliance has agreed to a modest increase in production of 206,000 barrels per day for April. However, much of this oil still faces challenges in being transported by sea out of the Middle East.
