Global oil prices surged by nearly six per cent on Wednesday after United States President Donald Trump declared that the ceasefire with Iran had ended, reigniting concerns over crude supplies from the Middle East and prompting investors to shift toward safe-haven assets.
As of 2:00 p.m. WAT, international benchmark Brent crude climbed 5.66% to $78.36 per barrel, while West Texas Intermediate (WTI) advanced 5.48% to $74.30 per barrel as traders reacted to escalating geopolitical tensions.
The rally followed Trump's remarks at a NATO summit in Turkey, where he said the ceasefire with Iran was "over" while indicating that diplomatic engagement could still continue.
The renewed tensions come after Iranian attacks on vessels transiting the Strait of Hormuz, a strategic shipping route through which a significant share of global crude exports passes. The attacks prompted extensive US military strikes on Iranian targets earlier this week, leading to further reprisals against American military installations in the Gulf.
The United States has also withdrawn a temporary sanctions waiver that had allowed limited Iranian oil exports, adding fresh uncertainty to global supply expectations.
Analysts said the renewed hostilities have revived concerns over potential disruptions to crude flows from the Middle East, a key factor supporting the sharp rebound in oil prices.
Kathleen Brooks, Research Director at trading firm XTB, said geopolitical risks had intensified but noted that a sustained rally above $80 per barrel for Brent would likely require a more severe disruption to regional oil exports.
According to Brooks, a renewed US naval blockade of the Strait of Hormuz that prevents Iranian crude exports would represent a much larger supply shock capable of driving prices significantly higher.
The escalation in geopolitical tensions also weighed heavily on global equity markets.
European stocks extended losses during Wednesday's trading, with Frankfurt's DAX falling 2.1%, Paris' CAC 40declining 2.0%, and London's FTSE 100 losing 1.4%.
Asian markets also closed mostly lower as investors reacted to both the Middle East developments and continued concerns over elevated valuations in technology stocks driven by artificial intelligence investments.
South Korea's Kospi dropped 5.4%, extending losses after reaching record highs last month. Technology giants Samsung Electronics and SK hynix each declined about 6%, despite Samsung projecting a roughly 19-fold increase in second-quarter operating profit on the back of strong AI chip demand.
Japan's Nikkei 225 lost 2.1%, while China's Shanghai Composite slipped 0.5%.
Hong Kong, however, bucked the broader regional trend, with the Hang Seng Index gaining 3.0% as investors accumulated Chinese technology stocks. Alibaba jumped more than 12%, while JD.com and Tencent each advanced nearly 4%.
Dan Coatsworth, Head of Markets at AJ Bell, said investors have become increasingly cautious amid concerns over heavy spending on artificial intelligence and stretched valuations across parts of the technology sector, prompting widespread profit-taking in recent weeks.
Currency markets also reflected the shift in investor sentiment.
The US dollar strengthened against major currencies as rising oil prices fuelled expectations that inflationary pressures could persist, potentially reducing the scope for the US Federal Reserve to ease monetary policy in the near term.
The latest market movements underscore the sensitivity of global financial markets to developments in the Middle East, with energy prices and investor sentiment continuing to react sharply to changes in geopolitical risk and the outlook for global crude supply.