Oil cracks $US100 a barrel as war rages and markets brace for bumpy ride

Oil neared $US100 a barrel and US stock futures fell as escalating hostilities in the Middle East and widening stress on oil shipping and infrastructure had global investors braced for more turbulence when trading resumes Sunday. The dollar gained.

Brent crude oil rose to more than $US102 a barrel after notching its biggest-ever weekly gain on Friday.

Crude markets faced the prospect of further upheaval this week as the conflict involving Iran entered its ninth day, with major producers curbing output, storage hubs nearing capacity and traffic through the Strait of Hormuz effectively halted.

US equity-index futures tumbled more than 1 per cent at the open. Asian stocks also looked set to fall at the open. The dollar strengthened against all its Group-of-10 peers on Monday.

“This is no longer just about Hormuz being effectively shut, it is about supply disruption spreading deeper into the region, it is about supply disruption spreading deeper into the region,” said Dave Mazza, chief executive officer at Roundhill Financial. “That is the kind of shift that can push already-nervous investors to take more risk off the table.”

Selling swept across regions and asset classes last week as the geopolitical flareup added fresh stress to markets that are already under pressure from AI disruptions and worries about the potential for cracks in credit markets.

The escalating crisis has left investors caught between the risk of renewed inflation stemming from elevated oil prices and signs of cooling in the US labour market that may strengthen the case for monetary easing.

Overnight Sunday, Iran pressed attacks on Mideast neighbours, while Israel struck fuel depots in Tehran and threatened the Islamic Republic’s power grid. President Donald Trump warned the US would consider targeting areas that weren’t previously aimed for. The attacks will continue “until they surrender or, more likely, completely collapse!” he said in a social media post.

The Cboe Volatility Index, a gauge of implied price swings in the S&P 500 known as the VIX, surged toward 30 on Friday, pushing the spot price above its three-month futures in the largest inversion in almost a year.

“The worst is yet to come in the stock market reaction,” said Michael O’Rourke, chief market strategist at JonesTrading. “I would expect more of a risk-off mood until we get some tangible positive news.”

Meanwhile on Friday in the US, nonfarm payrolls fell 92,000 last month, one of the largest declines since the pandemic. While some of the downside was expected, like a temporary dent from striking healthcare workers and a potential hit from bad weather, a wide array of industries cut jobs. The unemployment rate rose to 4.4 per cent.

In corporate highlights Muji, the Japanese retailer known for pared-back household goods and logo-free clothing, is betting on its fast-growing, value-for-money skincare products to drive growth at home and abroad.

Samsung Electronics Co.’s unionised workers will begin voting this week on whether to stage an 18-day strike in demand of higher pay.

Gap sank after reporting sales and profit that came in slightly below expectations as two of its apparel chains underperformed.

Bloomberg.