Oil Price Dip as Iran Downplays Attacks After Initial Escalations

Oil and gold prices experienced a dip following indications from Iranian authorities that downplayed reports of an attack by Israel.

Initially, Brent crude, the international benchmark, surged past $90 a barrel after news of the attack surfaced, only to retreat later.

Gold prices, too, saw a brief surge, nearing a record high, before settling below $2,400 an ounce.

Concerns linger over the potential disruption of oil supplies amidst escalating conflict in the Middle East, with investors closely monitoring Israel’s response to Iran’s recent direct drone and missile assault.

Crude Oil (Credits: iStock)

While oil prices initially surged by up to 3.5%, they subsequently receded to around $87 a barrel as Iranian state media reported “no damage” in Isfahan province, where earlier reports had suggested explosions.

The sharp and sustained increases in oil prices raise concerns about inflation, given the commodity’s crucial role in fuel production. The consequent rise in fuel and energy prices has been a significant driver of global living costs in recent years.

Randeep Somel, a fund manager at M&G Investment Management, highlighted inflationary concerns, stressing their potential impact on markets.

Despite a slowdown in the pace of inflation, particularly in the UK, where it remains above the Bank of England’s 2% target, some economists predict that interest rate cuts may not materialize until later in the year.

Crude Oil

Amidst the Middle East tensions, fears emerge regarding potential disruptions to shipping routes, particularly through the crucial Strait of Hormuz, responsible for facilitating about 20% of the world’s oil supply.

Stock markets exhibited mixed reactions to the unfolding events, with the Dow Jones Industrial Average rising approximately 0.5% in mid-day trade in the US, while the S&P 500 and Nasdaq experienced declines.

Similarly, in the UK, the FTSE 100 saw a modest increase, while the FTSE 250 ended lower. In Asia, Japan’s Nikkei 225 fell by 2.7%, and Hong Kong’s Hang Seng dropped by 0.9%.

Josh Alba
Josh Alba
Josh Alba stands at the forefront of contemporary business journalism, his words weaving narratives that illuminate the intricate workings of the corporate world. With a keen eye for detail and a penchant for uncovering the underlying stories behind financial trends, Josh has established himself as a trusted authority in business writing. Drawing from his wealth of experience and relentless pursuit of truth, Josh delivers insights that resonate with readers across industries.
Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x