Oil Prices Surge Past $96 as Mideast Conflict Rattles Asian Markets

Asian stock markets closed mostly in positive territory Thursday as geopolitical tensions in the Middle East pushed international oil prices to their highest levels since early June. Brent crude climbed 2.2% to $96.14 a barrel, driven by ongoing conflict that has disrupted shipping through the Strait of Hormuz, a critical chokepoint for global energy supplies.

South Korea’s Kospi index surged 3.7% to 7,028.66, buoyed by renewed investor interest in artificial intelligence-related equities despite weakness on Wall Street. Samsung Electronics gained 3%, while SK Hynix, a major memory chipmaker, advanced 3.4%, reflecting broad strength in the technology sector across the region.

Japan’s Nikkei 225 edged up 0.5% to 66,461.62, with technology stocks leading the advance as SoftBank Group climbed 3.3%. The U.S. dollar strengthened to 163.05 yen, hovering near four-decade highs as expectations of widening interest rate differentials between the United States and Japan continued to support the American currency.

Hong Kong’s Hang Seng rose 1.3% to 25,227.06, while Shanghai’s benchmark index slipped 0.2% to 3,859.69. Australia’s S&P/ASX 200 gained 0.7% to 8,883.00, though Taiwan’s Taiex lost 1% and India’s Sensex fell 0.3%, reflecting divergent sentiment across the region.

U.S. stock futures declined following a subdued Wednesday session on Wall Street, where major benchmarks barely moved despite climbing oil prices. The S&P 500 edged down 0.1% to 7,498.96, the Dow Jones Industrial Average slipped less than 0.1% to 52,218.58, and the Nasdaq composite fell 0.6% to 25,690.90.

Alphabet, Google’s parent company, sank 1.5% ahead of earnings that ultimately beat expectations, demonstrating the artificial intelligence investments are producing measurable returns. However, the stock declined another 2.9% in after-hours trading, illustrating investor concerns about whether massive AI spending will ultimately prove profitable.

Tesla dropped 1.3% on Wednesday and fell a further 4.1% after hours following the automaker’s report of declining quarterly profits despite strong vehicle sales increases. Elon Musk’s company cited elevated research and development spending as a factor weighing on earnings performance.

Micron Technology fluctuated between losses and gains before settling with a 1.2% decline, though the semiconductor manufacturer remains up 236% for the year following a 14.4% jump earlier in the week. Investors continue scrutinizing whether massive capital flowing into AI infrastructure will generate sufficient returns to justify the expenditure.

Rising crude prices are pressuring equities globally as higher energy costs erode corporate profit margins and threaten to slow consumer spending. U.S. benchmark crude gained 1.8% to $88.35 a barrel as military operations intensified in the Persian Gulf region.

The U.S. military conducted its 12th consecutive night of strikes against Iran on Wednesday, with both combatants increasingly targeting civilian infrastructure in an escalating campaign. The conflict has severely disrupted maritime traffic through the Strait of Hormuz, normally handling approximately one-fifth of all globally traded oil and natural gas.

Higher petroleum prices risk reigniting inflation pressures, potentially prompting the Federal Reserve and other central banks to raise borrowing costs and thereby weaken economic growth. The yield on 10-year Treasury securities climbed to 4.65% from 4.63% late Tuesday and from 3.97% before hostilities commenced, pushing long-term mortgage rates to their highest levels in nearly a year.

The euro gained ground in early Thursday trading, rising to $1.1433 from $1.1414, reflecting broader currency market movements as investors reassess risk factors in the global economy.