Oil Prices Top $100 as Shipping Attacks Pressure Global Markets
Oil prices rose above $100 US a barrel for the first time since late May after attacks on two Saudi oil tankers in the Red Sea heightened concerns about global energy supplies and shipping routes.
Brent crude, the international benchmark, climbed seven per cent to settle at $100.69 after briefly reaching $102. The attacks raised concerns about transportation through the Bab el-Mandeb strait, a key link between the Red Sea and Arabian Sea. The development adds pressure to oil flows already affected by instability around the Strait of Hormuz.
Rising energy prices weighed on global stock markets. The S&P 500 declined 1.2 per cent, the Dow Jones Industrial Average fell one per cent, and the Nasdaq composite dropped 2.2 per cent. European markets also moved lower, while several Asian indexes had posted gains earlier in the day.
Companies with significant fuel costs were among the hardest hit. American Airlines fell 8.4 per cent and Southwest Airlines lost 6.2 per cent, despite both reporting stronger-than-expected quarterly results. Higher oil prices can increase operating expenses, raise consumer fuel costs and contribute to inflation.
Bond markets also responded. The yield on the 10-year U.S. Treasury rose to 4.69 per cent, reflecting concerns that renewed inflation could lead central banks to maintain or increase interest rates. In Canada, the average gasoline price reached $1.802 per litre, according to GasBuddy.
Technology shares added to the market decline. Tesla dropped 14.5 per cent after reporting weaker-than-expected profit. Alphabet fell 7.1 per cent despite exceeding profit and revenue forecasts, as investors focused on the company’s growing artificial intelligence spending. Together, geopolitical risks, energy costs and corporate earnings contributed to a broad pullback across financial markets.
The developments illustrated how disruptions in major shipping corridors can quickly affect commodity prices, borrowing costs, company valuations and household transportation expenses worldwide.