Oil prices climbed as two separate vessel attacks in the Strait of Hormuz reignited fears of disruptions to global oil traffic in the critical waterway. Brent crude futures rose towards $73 a barrel, while West Texas Intermediate (WTI) approached $69. A natural gas carrier, Al Rekayyat, reported being hit and catching fire, and separately, Axios reported Iran fired at least two missiles at commercial ships, causing damage but no casualties. This situation highlights the fragility of the Middle East de-escalation trade, although analysts don't yet anticipate a full disruption.
The attacks occurred despite signs of easing tensions, as the Strait of Hormuz had partially reopened after a near-total closure during the US-Iran war. Traffic, while recovering, remains below pre-conflict levels. The broader market sentiment remains less supportive, with OPEC+ continuing to increase output and Saudi Aramco lowering Arab Light prices by $11 a barrel to $1.50 below a benchmark for next month, a discount last seen during price wars in 2015 and 2020. This move by Riyadh follows OPEC+'s decision to raise output quotas, signaling a desire to increase production as conditions normalize.
Asian stock markets experienced a downturn due to concerns over the global economic outlook and escalating Iran-related tensions. Major indices in South Korea, Japan, and across Asia declined. South Korea's KOSPI index tumbled over 4%, erasing more than $170 billion in market value, with Samsung Electronics shares dropping as much as 7.5% despite forecasting an 18-fold jump in operating profit. Investors focused on a "revenue miss," as Samsung's guided $171 trillion in sales fell short of the most bullish market estimates. This negative sentiment spilled over to other semiconductor players, with SK Hynix falling 6.5% and Japan's Kawasaki Heavy Industries dropping nearly 4%.
