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World oil prices rallied more than 2% on Monday (October 7, 2024) as tensions escalated in the crude-rich Middle East one year after the deadly Hamas attacks on Israel.
European stock markets mostly rose after more big gains in Asia as China’s stimulus boost, a strengthening U.S. economy and the outlook for interest rates in major economies outweighed geopolitical unrest.
‘Wild ride’
Brent North Sea crude, a benchmark oil contract, came close to surpassing $80 per barrel on Monday for the first time since late August.
Oil futures have experienced recent volatility, with Brent surging above $80 in the late northern hemisphere summer on Middle East tensions, before slumping under $70 last month on concerns about weak demand.
Beyond Middle East tensions, oil is also being supported by hopes of stronger Chinese demand after Beijing recently announced major stimulus measures to boost its flagging economy.
Offsetting price support is an expectation in the market that the OPEC+ group of oil producing nations could reverse output cuts, according to analysts.
“The oil market is on a wild ride, caught in a whirlwind of geopolitical tension, OPEC+ strategy shifts, and a slowdown from its biggest customer, China,” noted independent analyst Stephen Innes.
Israel on Monday marked the one-year anniversary of the October 7 attack, the deadliest in its history and one that sparked a devastating war in Gaza that has since expanded into Lebanon.
Israel is preparing its retaliation against Iran over its missile attack last week, raising fears of all-out regional war.
Stocks higher
There were sizeable gains Monday for the Tokyo and Hong Kong stock markets, with the former boosted by a softer yen supporting Japanese exporters.
Hong Kong extended a rally fuelled by China’s plans to boost its growth, notably by supporting its battered property sector and thanks to interest-rate cuts.
Shanghai was closed for a holiday.
Concerns over Europe’s biggest economy, Germany, weighed on Frankfurt’s stock market Monday, while London and Paris nudged higher nearing the half-way stage.
Official data showed Germany’s industrial orders fell more than expected in August, adding to fears that the country will end the year in recession.
A strong U.S. jobs report Friday increased expectations that the Federal Reserve would avoid consecutive big cuts to interest rates.
All three main indices on Wall Street rallied ahead of the weekend, while U.S. inflation data this week will be closely watched for further clues on the Fed’s thinking heading into its next call over rates.
Published – October 07, 2024 06:16 pm IST
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Oil prices extend upward march on Mideast tensions
