A jump in oil prices amid the rise of the dollar and the collapse of global stocks

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A jump in oil prices amid the rise of the dollar and the collapse of global stocks

Oil prices jumped, the dollar rose, and global stocks fell today, Monday, with expectations of continuing The military conflict in the Middle East has been raging for weeks, threatening to disrupt the path of global economic recovery and perhaps reignite inflationary pressures.

And Brent rose by about 10% to $79.90 per barrel, after briefly exceeding $82, while US crude rose by 8.2% to $72.64 per barrel. Gold, as a safe haven, also jumped by 2.6% to $5,413 per ounce.

The movements came after Israel expanded its air strikes on Tehran, to include sites belonging to the Hezbollah group in Lebanon, while US President Donald Trump indicated the possibility of military operations continuing for weeks.

And the eyes of the markets turned to the Strait of Hormuz, through which about a fifth of seaborne oil trade and nearly 20% of global liquefied natural gas trade passes.

Although the shipping lane has not been closed yet, ship tracking data showed tankers congesting on both sides of the strait amid fears of targeting or insurance difficulties, according to Reuters.

Michael Langham, emerging markets economist at Aberdeen Investments, said that disruption to global energy supplies represents a tangible risk in the long term. Short, and adds clear upward risks to oil prices, ruling out at the same time that causing a global oil shock is a goal of the US administration ahead of the midterm elections.

Analysts warn that the continued rise in oil prices may restore inflationary pressures globally, and constitute an additional burden on companies and consumers, which may weaken demand.

The OPEC Plus alliance had approved an increase in production of 206 thousand barrels per day for the month of April, but the export of these quantities It remains dependent on the security of shipping routes in the region.

Stocks decline and energy leads gains.

Global stock markets suffered widespread losses; The European Stock 600 index fell by 1.7%, after Asia-Pacific stocks (excluding Japan) fell by 1.8%. S&P 500 futures also fell by about 1.5%.

Bank stocks led losses in Europe as concerns about economic growth escalated, while airline stocks, which are sensitive to fuel prices, fell by about 5%. Technology stocks were also subject to selling pressure in Europe and Asia.

On the other hand, energy stocks jumped by 4% to new record levels, supported by the rise of BP and…"Shell" About 6% for each. Shares of European defense companies also rose.

In the Middle East, the UAE and Kuwait temporarily closed their markets due to “exceptional circumstances.” While Chinese leading stocks recorded slight gains despite China’s heavy dependence on energy imports from the region.

The dollar regains its shine and attention is on the Fed

In the currency markets, the euro and the British pound fell by about 1%, while the dollar was the biggest gainer, rising even against safe haven currencies such as the Japanese yen and the Swiss franc.

Jordan Rochester, head of fixed income and currency strategy in Europe, the Middle East and Africa at Mizuho, said that the traditional relationship between the dollar Risks have re-emerged with the new geopolitical crisis.

Bond Market

In the bond market, 10-year US Treasury bond yields rose to 3.969%, after touching the lowest level in 11 months during early trading, before rising again as investors focused on the inflationary impact of oil prices and the possibility of reducing the chances of an interest rate cut by the Federal Reserve.

This week, markets are awaiting a package of US data, including the Institute for Supply Management’s survey of the industrial sector, And retail sales, and the non-farm payrolls report, at a time when market prices indicate a 50% probability of a rate cut in June.