World Oil Prices Jump 6 Percent Following Trump's Talks with US-Iran End

ILLUSTRATION UNSPLASH/Hazel J

JAKARTA - World oil prices jumped more than 6% and stock markets around the world fell on Wednesday, after US President Donald Trump revealed an agreement through a Memorandum of Understanding (MoU) with Iran "is over," following a series of attacks in the Middle East region.

As reported by CNN, Wednesday, July 6, Brent crude, the benchmark for global oil prices, rose to $78.93 per barrel shortly after 5 a.m. local time, or an increase of about 6.4% that day. WTI, the benchmark for US oil prices, rose 6.5% to $74.99 per barrel.

The rise comes after prices had been falling for weeks, amid hopes the United States and Iran could reach an agreement to reopen the vital Strait of Hormuz - a route that previously carried around a fifth of global oil supplies before the war broke out.

Although oil prices are still far below the peak wartime prices that had exceeded $120 per barrel for Brent, this increase could be enough to rekindle concerns about inflation.

The stock market experienced a sharp sell-off.

Dow and Nasdaq futures fell 1.3% and 1.6%, respectively, while S&P 500 futures fell 1%.

Meanwhile, major stock indexes in Europe fell about 2%.

In Asia, South Korea's KOSPI index closed down 5.4%, and Japan's Nikkei weakened 2.1% at the close of trading. On the other hand, Hong Kong's Hang Seng index rose 3%.

"Stock market sentiment is again under pressure due to the spike in oil prices," wrote Neil Wilson, a strategist at investment bank Saxo, in a note.

"Clearly, higher oil prices are fueling concerns about stagflation and weighing on economic growth prospects," he said.

"Stagflation" refers to a combination of feared conditions, namely high inflation and low economic growth.