MAR 31 – Oil fell below $100 a barrel and shares jumped in Asia on Wednesday after President Donald Trump said the US will leave Iran in “two to three weeks” regardless of whether a deal is struck with Tehran.
Japan’s Nikkei 225 index gained by 4.9%, while the Kospi in South Korea rose 8.6% in afternoon trading.
The price of Brent crude oil for delivery in June was trading around 5% lower at about $98.65 (£74.27) a barrel.
It comes after the price of Brent to be delivered in May rose by a record 64% in March as Iran threatened to attack vessels using the Strait of Hormuz, effectively shutting the key shipping route.
Speaking from the Oval Office on Tuesday, Trump said Iran is “begging to make a deal” but whether it happens or not is “irrelevant” to America’s timetable.
Earlier, Iranian President Masoud Pezeshkian said his country has the “necessary will” to put an end to the war but demanded certain guarantees to prevent the recurrence of any future aggression.
The global benchmark for oil is a contract to buy a barrel of Brent crude one month in the future. When this price rises, it typically pushes up fuel prices too, because oil is a key component.
The oil price surge in March was the biggest monthly gain since 1990 when Iraq’s invasion of Kuwait took both countries’ oil off the market, resulting in an energy supply shock, said Nicolas Daher from the Economist Intelligence Unit.
It also raised fears of a widespread oil supply disruption from other Gulf countries, leading to a surge in the cost of energy.
This latest spike in prices has been driven by expectations that the conflict will continue until at least the end of April, Daher said.
Oil refiners are also bidding more aggressively for crude as they try to boost production as markets around the world are hit by shortages of jet fuel and diesel, said Ole Hansen from Saxo Bank.
The fighting has continued in the Middle East. Lebanon’s capital Beirut was hit on Tuesday by airstrikes, with Israel’s military saying it was targeting a senior Hezbollah figures.
Trump is expected to address the public on Wednesday evening about the war.
Japan and South Korea have been hit particularly hard by the conflict as they are heavily reliant on energy from the Middle East.
Financial markets in both countries swung sharply in recent weeks as investors react to developments in the war.
By BBC
