International oil prices rose again on Wednesday as military tensions between the United States and Iran increased and the risk of new disruptions to crude shipments through the Strait of Hormuz grew, while financial markets balanced the conflict’s impact with a U.S. inflation reading that came in better than expected.
U.S. benchmark West Texas Intermediate (WTI) gained $0.86 to trade at $80.20 per barrel, while Brent rose $1.15 to $85.88 per barrel, driven by concerns about potential restrictions on one of the world’s main energy routes.
The renewed military escalation heightened investor worries after cross-attacks between Washington and Tehran, raising the prospect of further interruptions to oil and gas transit through the Strait of Hormuz.
“The Memorandum of Understanding between the United States and Iran signed last month turned out to be anything but that. Both sides are again exchanging military strikes and maintain completely different positions on the situation in the Strait of Hormuz,” said Tim Waterer, chief markets analyst at KCM Trade.
The analyst added that “with navigation in the Gulf increasingly dangerous, transport flows are declining again,” referring to the effect the crisis is having on international maritime trade.
Tensions flared again after new attacks in the region, increasing uncertainty about global energy supplies and adding upward pressure on oil prices.
Despite this backdrop, Asian stock markets mostly closed higher, following gains on Wall Street on Tuesday after a U.S. inflation report came in below market expectations.
South Korea’s Kospi led the advances, rising 7.1% to 7,343.37 points, helped by a rebound in semiconductor stocks after sharp losses in previous sessions.
In Japan, the Nikkei 225 rose 0.9% to 68,353.91 points, while Australia’s S&P/ASX 200 added 0.2%, closing at 8,830 points.
In China, Hong Kong’s Hang Seng gained 1.6% to 24,721.10 points, while the Shanghai Composite fell 0.4% to 3,952.04.
In the United States, major indices also ended the day higher. The S&P 500 rose 0.4% to 7,543.59, recovering part of the prior session’s 0.8% decline. The Dow Jones Industrial Average gained less than 0.1% to finish at 52,508.27, and the Nasdaq Composite added 0.9% to 26,107.01.
Markets were supported after the U.S. consumer price index showed that consumer prices rose 3.5% over the past twelve months, a reading that was less negative than analysts had expected.
That report reduced expectations of an additional interest-rate hike by the Federal Reserve at its next meeting.
After the data release, traders assigned less than a 17% probability to another increase in the Fed’s policy rate at the upcoming meeting.
(With information from the Associated Press)