Global crude oil prices surged nearly two percent following a CNN report that U.S. intelligence indicates Israel is preparing a strike on Iranian nuclear facilities, reigniting fears of heightened geopolitical instability in the Middle East.
The report, citing multiple U.S. officials, suggests Israel may be on the brink of escalating its longstanding standoff with Iran, particularly over Tehran’s nuclear ambitions. The prospect of a direct military confrontation in the already volatile region has prompted a sharp rise in oil prices, with West Texas Intermediate climbing 1.9% to $63.22 per barrel and Brent North Sea Crude rising 1.8% to $66.56.
“This is the clearest sign yet of how high the stakes are in the U.S.-Iran nuclear talks and the lengths Israel may go to if Iran insists on maintaining its commercial nuclear capabilities,” said Robert Rennie of Westpac Banking Corp. He added that crude would retain a risk premium as long as diplomatic efforts fail to yield progress.
Gold also benefited from the uncertainty, spiking nearly two percent as investors sought safe-haven assets. However, Asian equities showed resilience in early trading, with most major markets, excluding Tokyo and Singapore, continuing their rally on optimism over easing U.S.-China trade tensions.
Despite a recent thaw in tariffs between Beijing and Washington, relations took a hit again Wednesday after China condemned new U.S. export controls targeting high-tech semiconductors, accusing Washington of “bullying.” The move follows U.S. guidance warning companies against using Chinese-made AI chips, particularly from Huawei, due to national security concerns.
Meanwhile, cautious remarks from Federal Reserve officials dampened hopes of imminent interest rate cuts. St. Louis Fed President Alberto Musalem warned that ongoing tariff measures could harm growth and weaken the labor market, while Atlanta Fed’s Raphael Bostic pointed to added uncertainty from Moody’s ratings downgrade and Trump’s proposed tax cuts.
Key Asian market performances at 0230 GMT include:
• Hong Kong: Hang Seng Index up 0.5% at 23,806.59
• Shanghai: Composite Index up 0.2% at 3,386.46
• Tokyo: Nikkei 225 down 0.1% at 37,491.80
Currency markets reflected moderate movement, with the euro rising to $1.1322 and the pound up to $1.3425 against the dollar, while the dollar slipped to 144.07 yen.
With geopolitical tensions brewing and economic uncertainties mounting, markets remain on edge, watching closely for further developments in the Middle East and between the world’s two largest economies.
Written By Rodney Mbua
