Stocks Dip Amid Middle East Truce Uncertainty: What It Means for Your Investments and Oil Market in Oman
LONDON/SYDNEY — Global share markets declined on Thursday as the fragile Gulf truce showed early signs of strain, pushing oil prices back toward the $100-per-barrel mark and signaling prolonged inflationary pressures ahead. Notably, there was little evidence that the strategic Strait of Hormuz was open for significant transit, with Iran asserting control over this crucial oil route and demanding tolls for safe passage.
President Donald Trump took to social media, declaring that U.S. forces would remain in the Gulf until a deal was fully implemented. He warned that otherwise, the conflict would intensify, describing the consequences as “bigger, better, and stronger than anyone has ever seen before.”
Meanwhile, Israel conducted its heaviest airstrikes on Lebanon since its conflict with the Iran-backed Hezbollah militia began last month, resulting in over 250 fatalities on Wednesday.
In response, Brent crude futures surged 2.5 percent to $97.28 per barrel, while U.S. WTI futures rose 3.3 percent, reaching $97.55. The pan-European STOXX 600 index opened down 0.2 percent after a 3.7 percent jump on Wednesday following the ceasefire announcement.
Peter Kinsella, Head of Investment Services UK at UBP, noted that market movements continue to be headline-driven. Despite significant volatility in oil prices, major currency fluctuations remain limited. “It is very difficult for investors as they are dealing with a conflict where the protagonists don’t even know what they want,” he explained.
European government bond yields, which influence borrowing costs, edged higher in early trading after a steep decline on Wednesday. Data from Germany indicated an unexpected drop in industrial production in February, suggesting Europe’s largest economy was subdued and headed toward another quarter of contraction, even before the outbreak of hostilities with Iran.
In Asia overnight, Japan’s Nikkei closed 0.7 percent lower after a 5.4 percent gain the previous day. South Korea’s market fell 1.6 percent following a 6.8 percent jump. Chinese blue-chip stocks slipped 0.6 percent, while MSCI’s broadest index of Asia-Pacific shares outside Japan eased by 0.7 percent. On Wall Street, futures for the S&P 500 and Nasdaq were both down about 0.4 percent ahead of the opening bell.
With oil prices remaining approximately 40 percent above pre-conflict levels, inflation is expected to spike in upcoming global economic data. U.S. core inflation figures for February, due later Thursday, are forecast to show a 0.4 percent increase for the second consecutive month—before factoring in recent energy price hikes.
State Street’s PriceStats inflation data revealed that March experienced the largest month-on-month price increase since at least 2008, according to Michael Metcalfe, head of Macro Strategy. Minutes from the Federal Reserve’s latest policy meeting indicated a growing consensus that a rate hike might be necessary to control inflation, although many members still hope the next move will be a rate cut. This outlook moderated the rally in U.S. Treasuries, which was less pronounced than gains seen in European bonds on Wednesday.
Yields on U.S. 10-year Treasury notes stood at 4.296 percent, up from 3.96 percent before the Iran attack. Fed fund futures now price in only minimal easing—6 basis points—through the rest of the year, having abandoned expectations for a 50 basis point cut since late February. In contrast, European money markets anticipate at least two rate hikes from the European Central Bank this year.
JPMorgan analysts commented, “The committee broadly agreed that it was too early to act, suggesting the Fed will likely remain on hold this year, in line with our view.” The evolving rate outlook caused the dollar to recover some losses; the dollar index was at 99.06, while the euro remained flat at $1.1660, down from its prior day’s peak of $1.1721. The dollar gained slightly to 158.93 yen, bouncing back from a low of 157.89 on Wednesday.
In commodities, gold edged back to $4,713 per ounce after earlier reaching $4,777, while European natural gas prices rose modestly to 45.65 euros per megawatt-hour, a much smaller increase compared to oil.
— رویترز
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The escalating Gulf tensions and rising oil prices near $100 a barrel highlight critical risks for Oman’s economy, heavily reliant on oil exports, as market volatility and inflationary pressures intensify globally. For businesses, this environment demands strategic agility to manage cost inflation and supply chain disruptions while investors should monitor geopolitical developments closely to capitalize on oil market fluctuations and emerging regional opportunities. Smart entrepreneurs in Oman must consider diversification and risk mitigation now to navigate the uncertain outlook effectively.
