Global stocks experienced a decline and US equity futures showed volatility as Brent crude oil prices neared $100 a barrel. This surge in oil prices was attributed to recent attacks in the Middle East, particularly those impacting Saudi Arabian energy facilities. The escalating tensions between the US and Iran were cited as a significant factor contributing to the heightened oil prices, which in turn amplified inflation fears.
Saudi Arabia reported halting some energy operations near its border with Yemen following these attacks. Vitol Group, an oil trader, estimated that oil flows through the Strait of Hormuz, a crucial choke point, were approximately half of pre-war levels, though precise quantification was difficult. This disruption in supply further contributed to the upward pressure on oil prices.
In response to these geopolitical developments, Canada implemented retaliatory tariffs of up to 50% on US goods. Meanwhile, on the corporate front, ASML secured commitments from major chip manufacturers TSMC and Samsung to utilize its latest chip production technology. Market analyst Marija Veitmane from State Street discussed the market risks in anticipation of the upcoming CPI report later in the week.
