Rising oil prices, driven by conflicts in the Middle East and growing political uncertainty in Europe, kept investors on edge at the start of the week. Stock markets experienced downward drift in anticipation of key U.S. inflation data set to release later on. Iran’s declaration of a restricted zone near the Strait of Hormuz, following escalations involving U.S. forces and missiles targeting naval ships, further inflamed the situation.
The oil market reactions were swift, with Brent crude futures climbing nearly 1.5% to $97.6 a barrel, marking a seven-week high. Recent surges highlight a 35% increase since February, largely attributed to ongoing geopolitical tensions. Diesel prices, critical for various sectors, reached unprecedented levels, nearly doubling since the conflict began.
As food and fuel prices escalate globally, central banks are expected to raise interest rates. This week’s U.S. consumer price index figures are crucial for investors. The European Central Bank is predicted to elevate rates to 2.5%, with further hikes anticipated. Political shifts, especially the rise of the far-right in Europe, threaten the stability of the euro, continuing to challenge market confidence.
(With inputs from agencies.)