Oil prices surge as US-Iran talks falter and suppl…
Global oil prices climbed on Friday as stalled efforts to end the conflict involving Iran heightened concerns over possible disruptions to crude supplies. Markets remained focused on developments in the tense US-Iran negotiations, with traders also weighing the risk of further military and economic escalation.
Brent crude futures rose 1.45 per cent to $88.33 a barrel, while US West Texas Intermediate crude gained 1.26 per cent to $82.27. Both benchmarks were on course for substantial weekly gains as uncertainty surrounding regional oil supplies continued to influence trading.
Concerns intensified after the United States indicated that economic pressure on Iran could be increased, including the possibility of extending a naval blockade. Analysts warned that any significant escalation in the conflict could cause a much sharper increase in energy prices by threatening supplies from the region.
Market strategist Kyle Rodda of Capital.com said geopolitical uncertainty remained a major obstacle for financial markets despite otherwise supportive economic conditions. Investors have so far absorbed considerable uncertainty without demanding substantially higher risk premiums, but analysts cautioned that this balance could change quickly if tensions worsen.
Rising crude prices also weighed on European equities, which ended the week lower and broke a four-week run of gains. In the United States, major stock indexes also declined, with the Dow Jones Industrial Average falling 0.14 per cent, the S&P 500 losing 0.19 per cent and the Nasdaq Composite dropping 0.39 per cent.
Meanwhile, the US dollar weakened after disappointing retail sales data reduced expectations of another Federal Reserve rate increase. The softer dollar provided support to gold, with spot gold advancing 0.69 per cent to $4,380.03 an ounce.
Currency markets also remained focused on Japan, where the yen edged higher against the dollar amid speculation that the Bank of Japan could raise interest rates as early as September. The currency nevertheless remained close to the 160-per-dollar level, which traders believe could prompt further intervention from Japanese authorities.
Investors are now watching the next developments in US-Iran relations closely. A breakthrough in negotiations could ease pressure on energy markets, while any major escalation could trigger a renewed surge in oil prices and broader financial market volatility.
