Oil Shock Returns! Brent Crude Tops $98 as Iran War Rattles Global Markets

Global financial markets witnessed mixed trading on Thursday as escalating tensions in the Middle East pushed Brent crude oil above USD 98 a barrel, raising concerns over inflation, economic growth and corporate earnings.

European markets opened lower, reflecting investor caution over the sharp rise in energy prices. Germany's DAX fell 0.6 per cent, France's CAC 40 dropped 1.1 per cent, while Britain's FTSE 100 slipped marginally in early trading.

In contrast, Asian markets ended mostly higher, led by a strong rally in South Korea. The Kospi surged 4.4 per cent as technology stocks rebounded, with Samsung Electronics climbing 3.7 per cent and memory chipmaker SK Hynix gaining nearly 5 per cent. Japan's Nikkei 225 also advanced 0.5 per cent, supported by gains in technology companies, including SoftBank Group.

Hong Kong's Hang Seng index rose 1.3 per cent, while China's Shanghai Composite edged higher after recovering from early losses. Australia's benchmark index also posted modest gains, though India's Sensex closed 0.6 per cent lower.

Investor sentiment remained under pressure after Brent crude climbed over 4 per cent to USD 98.16 per barrel, its highest level since early June. US benchmark crude also surged to nearly USD 90 per barrel.

The latest spike in oil prices comes as the conflict involving Iran continues to disrupt shipping through the Strait of Hormuz, a vital trade route that handles nearly one-fifth of the world's oil and natural gas supplies. The prolonged disruption has intensified fears of supply shortages and higher energy costs.

On Wall Street, major indices ended Wednesday with little movement as investors balanced rising oil prices against corporate earnings. While Alphabet reported stronger-than-expected quarterly results, its shares declined in premarket trading. Tesla also fell after reporting lower profits despite stronger vehicle sales, as higher spending on research and development weighed on earnings.

Investors are increasingly concerned that higher oil prices could trigger another wave of inflation, forcing central banks, including the US Federal Reserve, to keep interest rates elevated for longer. Such a scenario could slow global economic growth, increase borrowing costs and limit gains in equity markets.

The US dollar remained strong against the Japanese yen, reflecting expectations that interest rate differences between the two economies could widen further.

As geopolitical tensions continue to dominate global markets, investors are expected to closely monitor developments in the Middle East, oil price movements and upcoming corporate earnings for further direction.