AP TOKYO: Shares in many markets fell on Friday as investors fretted over the mounting crisis in the Arabian Gulf and lingering worries about trade conflict between the US and China.
The US has blamed the suspected attacks on Thursday on two oil tankers near the strategic Strait of Hormuz on Iran. That has triggered the latest bout of selling in the markets with investors worrying about a potential escalation. The key concern centers on the supply of oil. One third of all oil traded by sea, which amounts to 20 percent of oil traded worldwide, passes through the strait.
The US military on Friday released a video it said shows Iran’s Revolutionary Guard removing an unexploded limpet mine from one of the oil tankers targeted near the Strait of Hormuz, suggesting that Iran sought to remove evidence of its involvement from the scene. Iran denies being involved.
“The attack on two oil tankers in the Gulf of Oman has raised the geopolitical temperature even further in the region, at a time when it is high already, given the strained relations between the US and Iran,” said Michael Hewson, chief market analyst at CMC Markets.
In Europe, Germany’s DAX tumbled 0.8 percent to 12,069 in midday trading. Britain’s FTSE 100 fell 0.5 percent to 7,328 and France’s CAC 40 also dipped 0.5 percent to 5,348.
Earlier, Japan’s benchmark Nikkei 225 edged up 0.4 percent to finish at 21,116.89. Hong Kong’s Hang Seng slipped 0.7 percent to 27,118.35, while the Shanghai Composite fell nearly 1 percent to 22,881.97.
Concerns over Gulf conflict escalation weigh on markets
Concerns over Gulf conflict escalation weigh on markets
Experts clash over effect of war on oil supply
- International energy chief dismisses crisis fears * But Qatari minister warns exports could halt ‘in weeks’
BRUSSELS: International Energy Agency chief Fatih Birol on Friday dismissed fears of a global oil crisis, and said there was “plenty of oil in the market.”
But he was contradicted by Qatar’s Energy Minister Saad Al-Kaabi, who said Gulf oil producers could halt exports within weeks because of the US-Israel-Iran war, sending crude prices to $150 a barrel.
The war on Iran and Tehran’s retaliatory attacks across the Gulf have already sent crude prices soaring by about 20 percent, fanning fears of a fresh spike in inflation that could hit the global economy. Shipping through the critical Strait of Hormuz has all but dried up.
US President Donald Trump has pledged to protect ships passing through and promised further action to “reduce pressure on oil,” but prices have remained elevated. Brent crude, the global benchmark, was up 2.77 percent on Friday to nearly $88 a barrel.
However, Birol said: “There is plenty of oil, we have no oil shortage. There is a huge surplus in the market. We are facing a temporary disruption, a logistical disruption.”
Nevertheless, Al-Kaabi insisted there would be pressure on oil supplies “in two to three weeks” if tankers were unable to pass through the Strait.
“Everybody that has not called for force majeure we expect will do so in the next few days that this continues. All exporters in the Gulf region will have to call force majeure,” he said. “Everybody's energy price is going to go higher. There will be shortages of some products and there will be a chain reaction of factories that cannot supply.”
Qatar halted its liquefied natural gas production on March 2, as Iranian retaliation for US and Israeli strikes continued to target Gulf countries.
