Concerns about a protracted conflict are driving up oil prices
Benchmark US Crude Rises 11.4% to $111.54 per barrel; Brent Crude Rises 7.8% to $109.03
Early on April 3, U.S. futures were slightly lower after the federal government released unexpectedly positive jobs statistics. On Good Friday, equity markets are closed, but futures markets continue to trade, albeit softly, into the morning. S&P 500 futures fell 0.3%, Dow Jones Industrial Average futures fell 0.2%, and Nasdaq futures fell 0.4%. After a disappointing February that witnessed 133,000 job losses, American employers added an unexpectedly robust 178,000 new jobs last month. The unemployment rate fell from 4.4% to 4.3%. Following significant price spikes the day before due to concerns that the Iran war may last longer than anticipated, energy markets were halted on April 3. On April 2, U.S. benchmark crude increased 11.4% to $111.54 per barrel. The international benchmark, Brent crude, saw a 7.8% increase in price to $109.03 a barrel. Late on April 1, President Donald Trump promised that the United States would keep attacking Iran and did not provide a clear timeline for resolving the Middle East crisis. According to a report from BMI, a division of Fitch Solutions, “a lengthier battle enhances the threat of physical infrastructure, extends interruptions via the Strait of Hormuz, and will entail a longer postwar recovery phase, with pricing repercussions spilling over later into the year.”
In Asia, things are quite different. For instance, Japan would require alternate routes or access to the Strait of Hormuz for the majority of its oil imports. However, according to some analysts, Japan and other countries are hoping for a deal with Iran that would permit petroleum to cross the strait. On Good Friday, trade was suspended in France, Germany, and the United Kingdom. Japan’s benchmark Nikkei 225 finished at 53,123.49, up 1.3%. The Kospi in South Korea increased 2.7% to 5,377.30. At 3,880.10, the Shanghai Composite fell 1.0%. On Good Friday, trading was suspended in Hong Kong, Singapore, Australia, New Zealand, the Philippines, Indonesia, and India.
