The Japan Times - Oil prices surge 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.

The international benchmark oil contract, Brent North Sea crude, surged more than six percent to hit $91.89 per barrel, after Trump said only the "unconditional surrender" of Iran would end the Middle East war. That is its highest level in nearly two years.

The main US contract West Texas Intermediate soared more than 11 percent to over $90 per barrel.

Maritime traffic has all but dried up through the Strait of Hormuz, through which a fifth of the world's crude oil and liquefied natural gas supplies run.

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

Trump's comments "dashed hopes that the conflict will be averted quickly, and the oil price has continued its push" higher, said XTB research director Kathleen Brooks.

Brent soared by more than a quarter and WTI by a third this past week.

"This is a disaster for the global economy," said Brooks.

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 while curbing the ability of central banks to cut interest rates to prop up growth.

"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.

Meanwhile, data showed the US economy had unexpectedly lost jobs in February, while unemployment also 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 fallen by 0.2 percent in January.

Investors 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 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 were down around one percent or more in late morning trading.

Europe's main markets, which had earlier shown only small losses, finished the day with losses of around one percent.

- Key figures at around 1630 GMT -

Brent North Sea Crude: UP 6.4 percent at $90.85 per barrel

West Texas Intermediate: UP 9.2 percent at $88.42 per barrel

New York - Dow: DOWN 1.3 percent at 47,349.37 points

New York - S&P 500: DOWN 1.2 percent at 6,752.33

New York - Nasdaq Composite: DOWN 1.0 percent at 22,527.81

London - FTSE 100: DOWN 1.2 percent at 10,284.75 (close)

Paris - CAC 40: DOWN 0.7 percent at 7,993.49 (close)

Frankfurt - DAX: DOWN 0.9 percent at 23,591.03 (close)

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 $1.1599 from $1.1604 on Thursday

Pound/dollar: UP at $1.3388 from $1.3357

Dollar/yen: UP at 157.61 yen from 157.55 yen

Euro/pound: DOWN at 86.64 pence from 86.87 pence

burs-rl/jj

M.Ito--JT