Oil Prices Stay Above $100 As Markets Slide

ISLAMABAD: (Web Desk) – Global oil prices remained above $100 per barrel on Friday as ongoing tensions in the Middle East continued to disrupt crude supplies, while stock markets around the world moved lower amid growing economic concerns.

With the conflict entering its third week, investors are increasingly worried that a prolonged crisis could intensify inflation and place additional pressure on the global economy.

The price of Brent Crude briefly fell below the $100 mark during trading, which initially lifted equity markets. However, stocks soon turned negative again as oil prices climbed back above that level.

Market analysts say crude oil movements are currently driving the direction of global financial markets. According to analyst Fawad Razaqzada of Forex.com, oil prices continue to create uncertainty for investors as the Middle East conflict shows no signs of easing.

He noted that traders are struggling to determine a fair price for crude oil amid developments such as the release of emergency strategic reserves and temporary easing of restrictions on Russian oil shipments already at sea.

Energy markets have been particularly shaken by Iran’s decision to close the Strait of Hormuz, a vital waterway through which roughly one-fifth of the world’s crude oil and liquefied natural gas supplies pass. The move has significantly pushed up energy prices.

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The surge in oil costs has increased fears that higher energy prices will ripple through the global economy and drive inflation higher.

Joshua Mahony, chief market analyst at Scope Markets, said concerns about a potential global energy crisis remain a major focus for investors, adding that inflation fears are rising with each passing day.

Before the conflict began, many analysts expected major central banks to start cutting interest rates. However, rising energy prices have shifted expectations, with many economists now predicting that policymakers may pause or even increase borrowing costs to contain inflation.

Next week will be particularly significant for financial markets, as seven major central banks are scheduled to announce decisions on interest rates. These include the Federal Reserve and the Bank of England.

Meanwhile, updated economic data from the United States showed that economic growth in the fourth quarter was revised downward to 0.7 percent from an earlier estimate of 1.4 percent.

Separate data also indicated that the Federal Reserve’s preferred inflation measure eased to 2.8 percent in January. While lower, the figure remains above the Fed’s long-term target of 2 percent and was recorded before the recent surge in energy prices.

Analysts say the Federal Reserve now faces a challenging environment where inflation remains persistent while economic growth and labour market momentum show signs of slowing.

In currency markets, the US dollar strengthened against several major currencies as investors sought safe-haven assets and anticipated that US interest rates could remain elevated for longer.

Financial markets will closely watch next week’s central bank meetings for signals on how policymakers plan to address rising oil and gas prices and their potential impact on inflation and interest rates.