Middle East tensions threaten global economy

Oil prices continued to rise yesterday due to concerns about escalating conflict in the Middle East. Brent crude oil traded at $74.8 per barrel, up nearly 2%, while WTI oil rose 2% to $71.2 per barrel.

Oil pumping equipment near Bakersfield City (USA)

Both crude futures closed up about 2.5% on Friday in the United States after rising as much as 5%. Stephen Innes, an analyst at SPI Asset Management in Switzerland, said rising tensions in the region had dampened the optimism that had fueled financial markets over the past week and the real concern was a possible Israeli attack on the oil industry of Iran, a major exporter in the Organization of the Petroleum Exporting Countries (OPEC). Iran exports about 1.7 million barrels of oil a day, most of it to China, but analysts said any reduction in production could have a major impact on the global market.

According to the Financial Times, traders and analysts warn of the risk of disruption to energy exports if the Middle East conflict spreads, because this region accounts for about a third of global oil production. In addition to being a major exporter, Iran also has a position blocking the Strait of Hormuz, a bottleneck through which oil and gas exports from Gulf countries such as Saudi Arabia, Qatar, Kuwait or the UAE pass. "So when Iran gets involved in a war with its neighbors, you face some risk of geopolitical disruption," said Mr. Bob McNally, founder of the analysis firm Rapidan Energy Group and a former advisor to former US President George W. Bush.

The turmoil in the Middle East has also affected stock markets and other commodities around the world. Except for Hong Kong's Hang Seng index, which rose thanks to China's stimulus policies, most Asian stock markets were in the red on October 2, following the sell-off on Wall Street, according to CNN.

In particular, defense company stocks rose across the board as the risk of conflict escalated. According to CNBC, shares of European defense contractors Saab and BAE Systems rose 2.2% yesterday while Thales and Rheinmetall rose more than 1.3%. Previously, shares of American contractors Lockheed Martin, RTX (formerly Raytheon), Northrop Grumman and L3Harris all rose more than 2.6% on October 1. Of which, shares of Lockheed Martin and RTX hit record highs while the other two companies reached their highest levels since 2022, according to Forbes.

Safe-haven assets also rose, with the dollar trading at a three-week high against the euro.

Source: https://thanhnien.vn/cang-thang-trung-dong-de-doa-kinh-te-toan-cau-185241003000533662.htm