Crude prices surged Wednesday following a report that US intelligence suggested Israel was planning a strike on Iranian nuclear facilities, sending geopolitical tensions into overdrive and fueling regional conflict fears. Both main crude contracts jumped almost 2% after Ireport247news reported multiple US officials as saying the government had received intelligence indicating Israel was preparing to target Iranian atomic facilities.
There are fears that such a sharp escalation could tip the Middle East into a war, with tensions already high over Israel’s strikes on Gaza. “This is the clearest sign yet of how high the stakes are in the US-Iran nuclear talks and the lengths Israel may go to if Iran insists on maintaining its commercial nuclear capabilities,” Robert Rennie, at Westpac Banking Corp, said. “Crude will maintain a risk premium as long as the current talks appear to be going nowhere.”
While safe-haven gold pushed almost 2% higher, the news appeared to have little detrimental effect on Asian equities in early trade, with most extending the previous day’s rally. However, investors are keeping tabs on China-US relations after Beijing hit out at Washington’s “bullying” over chip export controls.
The recent detente between China and the United States suffered a jolt Wednesday when Beijing slammed Washington’s “bullying” chip export controls. It also warned it would take steps against measures aimed at restricting Chinese access to high-tech semiconductors and supply chains.
Several Federal Reserve members appeared to dampen hopes they will cut US interest rates anytime soon as they warned over the effects of Trump’s tariffs on the economy and inflation. “Even after the de-escalation of May 12 (with China), they seem likely to have a significant impact on the near-term economic outlook,” St. Louis Fed chief Alberto Musalem said. “On balance, tariffs are likely to dampen economic activity and lead to some further softening of the labour market.”
Current Market Figures
- West Texas Intermediate: UP 1.9% at $63.22 per barrel
- Brent North Sea Crude: UP 1.8% at $66.56 per barrel
- Hong Kong – Hang Seng Index: UP 0.5% at 23,806.59
- Shanghai – Composite: UP 0.2% at 3,386.46
- Euro/dollar: UP at $1.1322 from $1.1284 on Tuesday
- Pound/dollar: UP at $1.3425 from $1.3391
- Dollar/yen: DOWN at 144.07 yen from 144.47 yen
- New York – Dow: DOWN 0.3% at 42,677.24 (close)
- London – FTSE 100: UP 0.9% at 8,781.12 (close)