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Today Fundamental Analysis: Oil Resumes its Rally as Escalating Middle East Tensions Renew Supply Fears
Oil prices surged more than 10%, with Brent crude reaching $100 per barrel and WTI climbing to $95, as markets remained worried about supply disruptions from the Middle East conflict. The rally came despite the International Energy Agency (IEA) announcing a record release of 400 million barrels from emergency reserves, including 172 million barrels from the U.S. Strategic Petroleum Reserve. Investors remain skeptical that these releases can offset the massive supply shock caused by the closure of the Strait of Hormuz.
U.S. stock futures fell sharply in the afterhours, with Dow futures dropping about 460 points, as oil prices continued to surge amid the ongoing U.S.–Iran conflict. S&P 500 and Nasdaq futures also declined around 1%, reflecting growing investor concerns over rising energy prices and inflation risks.
In yesterday's session, all three major US indices closed lower with the S&P 500 down 0.4%, and trading at 6,702 today, and Dow Jones closing 0.8% and falling further today to 46,820. Nasdaq 100 was also down 0.2% and declining even more today, reaching 24,681. Investors are also watching upcoming economic data this week, including jobless claims, housing starts, and the PCE inflation report, which could influence expectations for the U.S. economy and monetary policy.
Additionally, Asia-Pacific markets declined today as oil prices surged amid escalating tensions in the Middle East. Equity markets across the region moved lower, with Japan’s Nikkei 225 dropping 1.5%, the Topix losing 1.3%, and South Korea’s Kospi declining nearly 1%.
Gold remained below the $5,200 level early Thursday, pressured by a stronger U.S. dollar, even as geopolitical tensions in the Middle East intensified.
