Oil prices steadied on Friday after jumping on fears of a Middle East crisis as investors awaited Israel’s response to Iran’s missile attack, while Hong Kong shares resumed their rally on a mixed day for markets shares.
Speculation over Israel’s response to dozens of rockets fired at it on Tuesday has fueled concerns that the region could erupt into a wider conflict involving Iran.
Crude has risen about 10 percent since that release on fears of a supply shock, while China’s recent push to reignite its massive economy has the potential to boost demand.
Both benchmark contracts jumped around 5% on Thursday when US President Joe Biden said he was “discussing” possible Israeli strikes on Iranian oil sites in retaliation for Tehran’s missile barrage on Israel.
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They later settled and were slightly higher in early Asian trade.
As Israel continues to carry out air and ground attacks in Lebanon targeting Hezbollah, Iran, which arms and funds the militant group, said it would step up its response in case of retaliation.
Supreme Leader Ayatollah Ali Khamenei is expected to give more details on Iran’s thinking in a sermon at the main weekly Muslim prayer in Tehran on Friday, his first in nearly five years.
But IG market analyst Tony Sycamore said it was unlikely that Iran’s oil would be targeted because it could reignite inflation just as global central banks struggle to reduce it.
“Instead, Israel is more likely to target critical weapons factories and military installations, similar to actions taken in April,” he wrote.
Tokyo rallies on weak yen, Hong Kong reverses after rise
“Then there is hope for a return to the shadow conflict that has been ongoing between Israel and Iran’s regional proxies since the October 7 Hamas attack.”
He added that if the crisis did escalate into direct confrontation, “there is a risk that Iranian oil (4% of global supply) could be cut off by embargo or military action.”
“The potential loss of Iranian supply may be offset by the return of Libyan oil and an increase in Saudi production as voluntary supply cuts are set to expire on December 1,” he said.
In equity markets, Hong Kong was back on the front foot after falling for the first time on Thursday since China last week unveiled a series of economic stimulus measures that sent investors flooding back into the market.
The stimulus — aimed mainly at the property sector — has sent shares in the city and mainland China up more than 20 percent on hopes that Beijing can finally reignite growth.
Oil rally extends after Iran attack, Hong Kong resumes rally
There were also gains in Tokyo at the end of a roller-coaster week dictated by the volatile yen following the election of Shigeru Ishiba as prime minister.
The yen initially jumped to less than 142 per dollar on the news due to Ishiba’s previous support for Bank of Japan rate hikes, but sank later in the week to more than 147 after he said the country was not yet ready for a third hike this year .
It was around 146.50 on Friday.
Singapore, Seoul and Manila rose, although Sydney, Wellington, Taipei and Jakarta all rose.
Investors are now awaiting the release of key US jobs data later in the day, which they hope could give an idea of ββthe Federal Reserve’s thinking on whether or not to cut interest rates again this month , and if so how much.
Keys around 02:30 GMT
West Texas Intermediate: UP 0.1 percent to $73.75 a barrel
Tokyo recovers some losses as most Asian markets rise
North Sea Brent crude: UP 0.1 percent at $77.68 a barrel
Tokyo – Nikkei 225: UP 0.5 percent at 38,732.41 (break)
Hong Kong – Hang Seng Index: UP 1.1 percent at 22,366.24
Shanghai – Composite: Closed for holidays
GBP/USD: UP at $1.3133 from $1.3124 on Thursday
EUR/USD: UP at $1.1032 from $1.1029
Euro/pound: DOWN to 84.00 pence from 84.03 pence
Dollar/yen: DOWN to 146.50 from 146.92 yen
New York – Dow: DOWN 0.4 percent at 42,011.59 (close)
London – FTSE 100: Down 0.1 percent at 8,282.52 (close)
Source: AFP