Global markets stir: U.S. strike on Iran ignites market volatility and oil price surge
Investors worldwide brace for further impacts as U.S. military action intensifies concerns over Iran's nuclear program and global economic stability
Bangkok: Global markets appeared to take the U.S. strike against nuclear targets in Iran in stride as investors, on Monday, watched to see how Tehran will react. The U.S. military’s strike on three Iranian sites has raised urgent questions about the future of Tehran’s nuclear program. Oil prices initially jumped more than 2% before settling about 60 cents higher, while U.S. stock futures and share benchmarks in Europe and Asia declined.
Analysts stressed that the uncertainty surrounding Iran’s subsequent actions remains the big unknown. Neil Newman, managing director of Atris Advisory Japan, noted, “I believe what we are thinking is or the thinking is that it is going to be a short conflict. The one big hit by the Americans will be effective and then we’ll get back to sort of business as usual, in which case there is no need for an immediate, panicky type of reaction.” Oil prices provided early indications of market sensitivity, with Brent crude edging up 0.7% to $77.59 a barrel and U.S. crude rising similarly to $74.36 a barrel. Meanwhile, futures for the S&P 500, Dow Jones Industrial Average, and the Nasdaq dipped 0.3%, 0.3%, and 0.5% respectively.
The conflict’s origins trace back to an Israeli attack against Iran on June 13, which first rattled oil markets and sparked broader concerns. Iran, a major oil producer and key player in the transit of global crude through the narrow Strait of Hormuz, risks significant disruption of shipping lanes, a scenario that would spike insurance rates and complicate overseas transport.
Market responses varied by region. In Europe, Germany’s DAX lost 0.2% to 23,302.51, France’s CAC 40 fell 0.4% to 7,562.06, and Britain’s FTSE 100 edged 0.1% lower to 8,763.16. Meanwhile, in Asia, Taiwan’s Taiex fell 1.4%, South Korea’s Kospi initially dropped by 1% before ending 0.2% lower at 3,014.17, and Tokyo’s Nikkei 225 edged 0.1% lower to 38,354.09. Hong Kong’s Hang Seng, however, regained ground, climbing 0.6% to 23,673.69, and mainland Chinese markets advanced with the Shanghai Composite index picking up 0.7%.
Further analysis from experts highlighted the range of possible scenarios. Tom Kloza, chief market analyst at Turner Mason & Co, speculated that Tehran’s leaders might refrain from drastic moves, remarking that disrupting shipping, an act he described as “a scorched earth possibility, a Sherman-burning-Atlanta move” could trigger a severe spike in oil prices. Houston-based oil market analyst Andy Lipow, with 45 years of experience covering the sector, warned that if the Strait of Hormuz were completely shut, oil prices could surge to $120–$130 a barrel, fueling higher consumer prices and complicating economic policy.
U.S. Secretary of State Marco Rubio emphasized the strategic importance of the Strait of Hormuz. Speaking to Fox News, Rubio asserted that any attempt by Tehran to close the waterway would be “economic suicide” and warned of a U.S. response. He also called on the Chinese government, heavily dependent on the Strait for oil supplies, to intervene to prevent such a disruption.
Newman also pointed out that the U.S. strike could benefit defense manufacturers, particularly in Japan and South Korea, noting that a rebound in market sentiment might eventually lower oil prices and lift global stock markets.