Oil and stock markets on Monday, March 23. “The situation is more serious than in the 1970s.”
Attacks in the Middle East continue, and geopolitical tensions are weighing on investor sentiment. Stock markets in Asia are once again in the red, but oil prices fluctuated between increases and decreases on Monday morning.
Oil prices perfectly reflect how uncertain the situation in the Strait of Hormuz region is. As Reuters notes, investors on Monday morning had to take into account, on the one hand, the growing threats from the US and Iran regarding energy facilities, and on the other hand, the release of millions of barrels of Iranian oil transported by sea after the temporary lifting of sanctions by Washington.
“Oil market sentiment may change in the near future due to threats and rhetoric, but its longer-term direction will continue to be influenced by the state of oil flows in the Middle East,” said Vandana Hari, founder of Vanda Insights, an oil market analysis company, quoted by the agency.
Fatih Birol, executive director of the International Energy Agency, said it was consulting with governments in Asia and Europe about releasing more stored oil “if necessary.”
Reuters emphasizes that Birol described the crisis in the Middle East as “very serious” and worse than the two oil shocks of the 1970s and the effects of the gas war between Russia and Ukraine combined.
See also: Iranian nuclear power plant target? “All options on the table”
Stock markets in Asia are in negative territory
The stock markets in Asia also reflect investors' nervousness on Monday. As calculated by PAP: the Japanese Nikkei and the Korean Kospi lost more than 5 percent in the morning. “Clear declines also affected Chinese stock exchanges – the Hang Seng index in Hong Kong lost 2.4%, and the Shanghai stock exchange lost 2%. The exchange rate of the Korean won fell to the lowest level in 17 years,” we read.
Reuters also points out that “in Europe, futures on the EUROSTOXX 50 and DAX indexes fell by 1.5%, and on the FTSE index by 1.2%. On Wall Street, futures contracts on the S&P 500 index fell by 0.4% and on Nasdaq by 0.5%.”
