Global stock markets ended lower on Thursday due to a sharp rise in oil prices following a statement by US President Joe Biden about being “in discussions” with Israel on potential strikes against Iranian oil facilities.
Brent crude for December delivery rose by 5.03%, closing at $77.62 per barrel, while the US equivalent, West Texas Intermediate (WTI) for November delivery, increased by 5.15% to $73.71 per barrel.
Oil prices surged after Biden mentioned ongoing “discussions” about possible Israeli strikes on Iranian oil infrastructure, following Iran’s missile attack on Israel on Tuesday.
When asked during a brief exchange with the press if he supported Israeli strikes on Iranian oil facilities, Biden replied, “We are in discussions about that. I think it would be a bit… Anyway...,” without finishing his sentence.
In Europe, major indices closed down due to geopolitical uncertainties in the Middle East.
The Paris stock exchange dropped 1.32%, Milan fell by 1.50% and Frankfurt declined by 0.78%, while London fared better, losing only 0.10%, supported by gains in oil stocks such as Shell (+1.61%) and BP (+0.57%).
The military escalation between Israel on one side, and Iran and Hezbollah on the other, “is directly linked to the increase in energy prices, as Europe is a net importer of hydrocarbons,” Sophie Chauvellier, manager at Dorval AM, explained.
Chauvellier added that the situation is “likely to reduce Europe’s competitiveness and lead to a deterioration of its economy.” The region is “more vulnerable than the United States in this regard, as Americans are almost self-sufficient,” she explained.
