Supply concerns worsened with Iranian attacks on commercial shipping around the Strait of Hormuz, pushing oil prices up more than 9%.
Benchmark US crude oil prices hovered around $95 a barrel.
The latest attacks marked an escalation in Iran’s campaign aimed at causing enough global economic pain to pressure the United States and Israel to end the war that began 12 days ago. But there were no signs that the conflict had abated.
Iran has targeted oil fields and refineries in the Gulf Arab states, effectively blocking cargo traffic through the Strait of Hormuz, which carries a fifth of all commercial oil.
In response, the International Energy Agency agreed on Wednesday to release 400 million barrels of oil, the largest amount of emergency oil reserves in history, to combat the effects of the conflict on energy markets. The United States planned to withdraw 172 million barrels of oil from strategic petroleum reserves next week to combat higher prices.
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The IEA’s announcement came a day after energy ministers from the Group of Seven – leading industrial nations Canada, the United States, France, Italy, Japan, Germany and Britain – met in Paris to discuss ways to lower prices.
But continued conflict and uncertainty have bolstered speculative prices that could rise further.
Markets in Asia fell back, with Tokyo’s Nikkei 225 losing 1.5% to 54,177.15. In South Korea, the Kospi lost 1% to 5,552.01, while Hong Kong’s Hang Seng gave up 1.2% to 25,577.71.
The Shanghai Composite index fell 0.5% to 4,110.20 and in Australia, the S&P/ASX 200 fell 1.6% to 8,601.70.
US futures lost more than 1% and the dollar hit 159 Japanese yen while the euro fell to $1.1538.
On Wednesday, U.S. stocks were little changed as the S&P 500 fell 0.1% to 6,775.80 for a second day of modest moves after brutal pressure from the war with Iran. The Dow Jones industrial average fell 0.6% to 47,417.27, and the Nasdaq composite rose 0.1% to 22,716.13.
Since the start of the war, sharp movements in oil prices have led to ups and downs, sometimes around the clock, for financial markets around the world. Oil prices briefly hit their highest level since 2022 on the prospect of a prolonged production shutdown in the Middle East, which in turn raised concerns about a rise in weak inflation in the global economy.
A report released Wednesday showed that U.S. consumers paid prices for food, gas and other living expenses that were 2.4% higher in February than a year earlier.
That’s the same level as last month and better than the 2.5% economists had expected, but it remains above the Federal Reserve’s 2% target and does not include an increase in gas prices due to the war this month.
High inflation combined with a stagnant economy will create a worst-case scenario called “stagflation” that the Federal Reserve has no good means of addressing. Inflation fears are rising not only because of high oil prices but also because of weak hiring by US employers.
With oil prices rising, traders pushed back forecasts for when the Fed could resume its cuts to interest rates. President Donald Trump has angrily called for such cuts, which would boost the economy and the labor market but potentially worsen inflation.
