Oil prices are climbing on concerns about an escalating Iran war
Stock markets recorded losses on Thursday as fresh inflation fears came into focus following a jump in oil prices. This comes amid reports that US President Donald Trump was considering further strikes on Iran ahead of next month's US midterm elections.
Asian shares fell, and oil prices surged on Thursday after Wall Street's S&P 500 and Nasdaq retreated from record highs.
Oil prices rebounded amid uncertainty over global crude supplies. The US and Iran have yet to reach a deal to end their war.
Crude prices had fallen earlier in the week amid signs that exports from the Middle East were heading back towards pre-war levels and that G7 nations had agreed to tap their stockpiles.
But anxiety returned as data showed Tehran had stepped up attacks on tankers in the Strait of Hormuz, the Houthis denied claims they had lost key territory and senior oil officials warned that global reserves were running worryingly low.
On Wednesday, The Atlantic reported that the White House had asked the Pentagon to draw up options for strikes on Iranian targets ahead of next month's US midterm elections, with Trump's Republicans at risk of losing control of both chambers of Congress.
The report said the scale of the potential strikes and their targets were still being discussed, but added that a wider operation could follow the 3 November vote.
Even supporters of the proposed strikes did not expect them to bring Iran to the negotiating table or restore safe passage through the Strait of Hormuz, according to the report. However, they hoped military action would help Trump project strength before the election.
Both main crude benchmarks rose more than 2% on Thursday, with supplies also hit by the loss of more than 500,000 barrels a day of Gulf of Mexico output as producers shut down operations ahead of Hurricane Isaias.
Early on Thursday, Brent crude, the international benchmark, was up 2.4% at $102.68 per barrel. US benchmark West Texas Intermediate rose more than 2.2% to above $90.20 a barrel.
The International Energy Agency said on Wednesday that its members supported accelerating oil stock releases already pledged in March, prioritising diesel where possible.
The rise in oil prices revived inflation fears and added to upward pressure on government bond yields, which have reached multi-year highs.
France's 10-year government bond yield stood at 4.89%, while Germany's was 3.48%.
The yield on the 10-year US Treasury remained near a multi-decade high, trading at 5.32%. Minutes of the US Federal Reserve's September meeting, released on Wednesday, showed that most officials considered another interest rate rise likely to be appropriate before the end of the year.
Inflation in the US remains above the Fed's 2% target. In September, the Fed raised rates for the first time since July 2023, by a quarter of a percentage point to a range of 3.75% to 4%.
Rising bond yields have also put pressure on stocks, as higher borrowing costs can weigh on company profits and make bonds more attractive to investors.
Markets across Asia fell, including Tokyo, Hong Kong, Sydney, Shanghai, Singapore, Seoul, Wellington, Taipei and Manila.
On Wednesday, Wall Street's benchmark S&P 500 dropped 0.2% a day after reaching an all-time high. The Dow Jones Industrial Average slipped 0.7%, while the technology-heavy Nasdaq Composite declined 0.2% from its record.
Tech shares pulled back from recent gains as investors prepared for earnings season, with high valuations and vast spending on artificial intelligence putting profits under scrutiny.
Samsung shares fell despite the company estimating a 782.5% rise in third-quarter operating profit to 107.4 trillion won (about €71.8 billion), supported by higher memory chip prices.
Meanwhile, the euro remained near its lowest level since June 2025, weighed down by concerns over France's high debt levels.
On Thursday morning, the euro traded at $1.12, the pound at $1.32 and the dollar at ¥158.13. Gold edged higher to $4,143.90 an ounce.
