The Japan Times - Oil prices climb as Mideast war rages, stocks fall on US jobs

The US-Israel war on Iran and Tehran's retaliatory attacks across the Gulf region have upended the world's energy and transport sectors.

International benchmark, Brent North Sea crude, surged more than five percent to hit $90.25 per barrel, its highest level since April 2024, after Trump said only the "unconditional surrender" of Iran would end the Middle East war.

The main US contract West Texas Intermediate advanced 8.1 percent to $87.56 per barrel.

Crude prices have soared more than 20 percent in a week, with traffic having all but dried up in the Strait of Hormuz, through which a fifth of the world's oil supplies and a substantial amount of gas run.

Market reaction to the conflict has been tempered by hopes that it will be short, but Trump's demand for Iran's capitulation increases the prospect of a long conflict.

The prospect of high energy prices for a sustained period has fanned fears of a fresh spike in inflation that could hit the global economy and curb cuts to interest rates.

"The longer that key energy infrastructure and shipping routes in the region are affected, the greater the chance of a significant inflationary impact," said AJ Bell investment director Russ Mould.

Attacks on oilfields were reported in southern Iraq and in the northern autonomous Kurdistan region, which forced a US-run oil field to shut production.

Earlier this week, US President Donald Trump pledged to protect ships through the Strait of Hormuz, but shipping companies have exercised caution in the region.

US Energy Secretary Chris Wright said Friday the US Navy was preparing to escort ships through the Strait of Hormuz "as soon as it's reasonable to do it".

Iranian state television on Friday reported a fresh drone strike on a ship in the strategic Strait of Hormuz, resulting in a fire, on the seventh day of the war with the US and Israel.

The television channel did not specify the type of vessel or its provenance. Earlier, an Iran military spokesman said a US oil tanker was "on fire" after having been targeted by Iranian forces.

Data showed the US economy unexpectedly lost jobs in February in a sharp reversal from the prior month while unemployment edged up.

The world's biggest economy shed 92,000 jobs last month, down from revised job growth of 126,000 in January, said the Labor Department.

New data released Friday also showed US retail sales had declined by 0.2 percent in January.

Investors would often look at data showing a slowdown in the economy as raising the chances of the US Federal Reserve as lowering interest rates.

But Briefing.com analyst Patrick O'Hare noted that the jobs figures also showed hourly earnings also accelerating.

This "muddles the economic view for the Fed", he said.

"Accordingly, look for the Fed to sit on its policy hands, unwilling to cut rates for now as it also contends with the spike in oil prices and the uncertainty of the Iran war," added O'Hare.

Until recently, the markets were anticipating the Fed would resume interest rate cuts in June, but that has now shifted to September.

Wall Street's main indices fell more than one percent at the start of trading in New York.

Europe's main markets, which had earlier shown only small losses, were also down around 1.5 percent in afternoon trading.

- Key figures at around 1330 GMT -

Brent North Sea Crude: UP 5.5 percent at $90.09 per barrel

West Texas Intermediate: UP 8.3 percent at $87.72 per barrel

New York - Dow: DOWN 1.6 percent at 47,201.38 points

New York - S&P 500: DOWN 1.3 percent at 6,741.00

New York - Nasdaq Composite: DOWN 1.4 percent at 22,438.66

London - FTSE 100: DOWN 1.4 percent at 10,270.06

Paris - CAC 40: DOWN 1.5 percent at 7,923.99

Frankfurt - DAX: DOWN 1.6 percent at 23,426.48

Seoul - Kospi: FLAT at 5,584.87 (close)

Tokyo - Nikkei 225: UP 0.6 percent at 55,620.84 (close)

Hong Kong - Hang Seng Index: UP 1.7 percent at 25,775.29 (close)

Shanghai - Composite: UP 0.4 percent at 4,124.19 (close)

Euro/dollar: DOWN at $1.1564 from $1.1604 on Thursday

Pound/dollar: DOWN at $1.3341 from $1.3357

Dollar/yen: UP at 157.94 yen from 157.55 yen

Euro/pound: DOWN at 86.66 pence from 86.87 pence

burs-rl/jj

K.Nakajima--JT