The Japan Times - Stocks drop, as oil rises as Mideast war persists

Oil prices have soared following the US-Israeli war on Iran begun on February 28 but have slid back from peaks which saw Brent crude briefly close in on the $120 mark on Thursday, up from $60 pre-conflict.

Brent crude, the benchmark international oil contract, rose 1.2 percent on Friday to nearly $110 per barrel. The main US contract, West Texas Intermediate, rose 1.9 percent to over $97 per barrel.

Brent spiked higher on Thursday after Tehran struck a number of energy sites around the Gulf in retaliation for Israel's attack on its South Pars field.

The attacks raised the spectre that the world may have to do without the 20 percent of oil and liquefied natural gas (LNG) that normally transit through the Strait of Hormuz -- which Iran has effectively shut since the start of the war -- for much longer.

Energy infrastructure continued to be targeted: Kuwait reported a fire at its Mina Al-Ahmadi refinery, a day after a direct hit on Qatar's Ras Laffan facility -- the world's largest LNG hub.

Iran's supreme leader Ayatollah Mojtaba Khamenei remained defiant on Friday, saying that Iranians had dealt a "dizzying blow" to the country's enemies.

US President Donald Trump sought to calm markets on Thursday by saying Israeli forces would not target any more of Tehran's energy infrastructure, while Israeli Prime Minister Benjamin Netanyahu indicated the end of the fighting could be close.

"Some calm has descended on markets after a brutal week, but fears remain elevated about how economies will respond to an inflation shock sparked by rampant energy prices," said Susannah Streeter, chief investment strategist at Wealth Club.

For Kathleen Brooks, XTB research director, "the bond market is leading the sell off today, even though gains for the oil price are moderate compared to Thursday, and European stock markets are stabilizing.

"The bond sell-off is a problem for the global economy, particularly the UK."

After the BoE flagged inflation risks, UK 10-year bond yields surged to the highest level since the 2008 global financial crisis.

"US Treasury yields climbed to their highest level since mid-2025, with investors increasingly pricing in a more hawkish Federal Reserve amid concerns that the conflict could sustain inflationary pressures," said analyst Axel Rudolph at investing and trading platform IG.

While the US Federal Reserve and European Central Bank both held interest rates steady this week, they voiced concern about the impact of rising energy costs.

Rising bond yields and the prospect of higher interest rates weighed on equity markets.

Wall Street stocks were lower in early afternoon trading. The Nasdaq was down 1.2 percent, with tech firms sensitive to interest rates.

European markets ended the day lower, with London's FTSE 100 sliding below the 10,000 level for the first time since early January as bond concerns mounted.

The dollar firmed against its main rivals.

- Key figures at around 1630 GMT -

Brent North Sea Crude: UP 1.2 percent at $109.96 per barrel

West Texas Intermediate: UP 1.9 percent at $97.32 per barrel

New York - Dow: DOWN 0.5 percent at 45,796.12 points

New York - S&P 500: DOWN 0.8 percent at 6,554.83

New York - Nasdaq Composite: DOWN 1.2 percent at 21,836.18

London - FTSE 100: DOWN 1.4 percent at 9,918.33 (close)

Paris - CAC 40: DOWN 1.8 percent at 7,665.62 (close)

Frankfurt - DAX: DOWN 2.0 percent at 22,380.19 (close)

Hong Kong - Hang Seng Index: DOWN 0.9 percent at 25,277.32 (close)

Shanghai - Composite: DOWN 1.2 percent at 3,957.05 (close)

Tokyo - Nikkei 225: Closed for a holiday

New York - Dow: DOWN 0.4 percent at 46,021.43 (close)

Euro/dollar: DOWN at $1.1560 from $1.1583 on Thursday

Pound/dollar: DOWN at $1.3324 from $1.3425

Dollar/yen: UP at 159.22 yen from 157.65 yen

Euro/pound: UP at 86.77 pence from 86.23 pence

burs-rl/giv

K.Hashimoto--JT