The markets reacted sharply to the deployment of US military assets in the Middle East amid rising tensions with Iran, with oil prices surging and stock markets declining.
The recent escalation of tensions between the US and Iran has prompted a significant reaction in global markets. Following the deployment of US aircraft carriers and fighter jets in the Middle East, oil prices soared above $71 per barrel, contributing to a downturn in the stock market while gold prices hovered near record levels. President Donald Trump has issued a 10-day deadline for Iran regarding its nuclear agreement, intensifying the uncertainty in the region.
The Strait of Hormuz, a critical chokepoint for global oil trade, handles nearly 25% of the world's maritime oil flow. Any disruption in this area could lead to increased fuel prices, affecting household budgets and escalating inflation expectations. Markets were already under pressure due to selling in the AI sector, and this development has added another layer of volatility, raising concerns among investors.
Oil, which briefly dipped earlier in the month, is now experiencing a surge, with Brent crude rising to $72 after initially breaking the $71 mark. Meanwhile, Asian stocks fell by 0.4%, reflecting investor fears, while US and European index futures showed slight gains. The situation remains precarious, with rising military tensions impacting commodity prices and overall market stability.
