OIL prices rose and stock markets diverged Monday as the Middle East crisis escalated with the entry of Houthi rebels into the Iran war and speculation that the United States could deploy troops on the ground.
Brent North Sea crude, the international benchmark, jumped more than three per cent at one point to reach almost $117 per barrel.
In Europe, London was up slightly in late morning trading, while Paris and Frankfurt were little changed, supported by gains to share prices of heavyweight energy and mining groups.
Shares of oil companies such as TotalEnergies and BP were up about two per cent, outpacing the rest of the market.
Aluminium prices climbed as much as around six per cent on the London Metal Exchange after Iran attacked two major aluminium plants in the Gulf, raising concerns over supply disruptions.
Asia’s leading stock markets closed lower, while the dollar traded mixed. The Japanese yen jumped on talk that the Bank of Japan could intervene on markets to shore up the country’s currency.
The yen’s gains weighed heavily on Japanese exporters, with the Tokyo stock market closing down almost three per cent.
“While the US dollar has seen some strength from haven-seekers, it is oil which remains centre stage,” noted Richard Hunter, head of markets at Interactive Investor.
“Attacks in the Gulf continued over the weekend, with a new layer of risk emerging as Yemen’s Houthis entered the fray, which could restrict shipping in the Red Sea, adding another choke point to oil supplies.”
As the conflict moved into its fifth week, the spectre of a widening conflict grew as Houthi rebels on Saturday said they had fired “a barrage of cruise missiles and drones” at strategic sites in Israel.
The strikes raised concern about the war spreading to the Red Sea, with Saudi Arabia rerouting much of its oil exports there to avoid the Strait of Hormuz, through which about 20 per cent of crude and gas usually passes and has been effectively closed by Tehran.
AFP
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