Oil Price Surges, Asian Stocks Fall As Trump Vows To Continue Iran Attacks

Oil prices rose more than $5 as President Donald Trump said the United States would continue attacks on Iran without committing to a specific timeline to end the war, fanning investor fears about sustained disruptions to supply.

Brent crude futures LCOc1 rose $6.33, or 6.3 percent to $107.49 per barrel early on Thursday, while US West Texas Intermediate crude CLc1 futures were up $5.28, or 5.3 percent to $105.40 per barrel.

The gains followed an earlier fall of more than $1 in both benchmarks prior to Trump’s televised speech to the nation.

Iran’s closure of the Strait of Hormuz in retaliation for the US-Israeli attacks has disrupted about one-fifth of global oil and liquefied natural gas (LNG) supplies, causing the world’s biggest energy crisis in decades.

“We are going to finish the job, and we’re going to finish it very fast. We’re getting very close,” Trump said on Wednesday. He also claimed that the US military had nearly achieved its goals in the conflict, which would end in two to three weeks. Those remarks are similar to previous ones.

Asian stocks also took a hit after Trump’s speech. Most Southeast Asian countries rely heavily on oil imports, leaving them especially exposed to the sharp rise in oil prices triggered by the Middle East war.

Asian emerging market stocks fell overall with a main regional index – the MSCI gauge of EM Asia equities – dropping 2.3 percent, while regional currencies weakened slightly by 0.2 percent.

South Korea’s main stock market, the Korea Composite Stock Price Index (KOSPI), fell by 4.2 percent after earlier gaining nearly 2 percent.

South Korean President Lee Jae Myung urged parliament on Thursday to promptly ‌pass a 26.2 trillion won ($17.3bn) supplementary budget to shore up the economy during “the worst energy security threat” caused by the Middle East crisis.

Singapore’s main stock market, the Singapore Exchange (SGX), opened at its highest level in two weeks but later slipped 0.8 percent. Malaysia’s benchmark index fell 1 percent. Markets in Indonesia and Taiwan also declined, losing about 1 percent and 1.4 percent respectively.

Stocks also fell in China and Hong Kong, with the benchmark Shanghai Composite index SSEC falling 0.53 percent by midday while China’s blue-chip CSI300 Index CSI300 lost 0.74 percent.

In Hong Kong, the main Hang Seng Index HSI fell 1.1 percent with shares in technology firm HSTECH down 2.2 percent.

“Prior to Trump’s speech, Iran took the unusual step of reaching out to the US directly by sending a letter to Americans saying that Iran had no enmity with the US and that it was acting in self-defence,” said Al Jazeera’s Patrick Fok, reporting from Singapore.

“That provided Washington with an off-ramp which had helped lift Wall Street stocks overnight.”

But now a lot of uncertainty is returning to markets, Fok added.

“I think it’s important to note also that from what we’ve seen over the last couple of days – particularly with that record rise that you saw in Asian markets for the year yesterday – that if there is any resolution to the price, we are going to see markets bounce back very quickly indeed,” said Fok.