Live updates: Follow the latest news on US-Iran war
Oil prices rose on Friday while stocks fell after the US and Iran exchanged fire in the Strait of Hormuz, putting further strain on their fragile ceasefire.
Global stocks, meanwhile, ended the week mixed, but Wall Street indices hit records, swept higher by artificial intelligence stocks and a solid jobs report.
Brent, the benchmark for two thirds of the world's oil, was up as much as 2.9 per cent before settling 1.23 per cent higher at $101.29 a barrel. West Texas Intermediate, the gauge that tracks US crude, gained 0.64 per cent to $95.42 a barrel.
Prices were briefly in the red in midday trading. For the week, both Brent and WTI shed about 6.3 per cent.
The rise in crude prices ends a three-day losing streak and, after an immediate reaction to renewed attacks in the Gulf region, moderated gains as a fragile truce between the two sides holds. Both Brent and WTI remain in the red for the week, down more than 6 per cent.
The US said on Thursday that it intercepted "unprovoked Iranian attacks" on naval vessels crossing the strait. US Central Command said it eliminated "inbound threats” and struck Iranian military sites used to attack American forces.
The US said it does not seek escalation, but is ready to protect its forces. A spokesman for the Khatam Al Anbiya Central headquarters, Iran's main operational command, accused the US of breaching the ceasefire.
US President Donald Trump said the ceasefire is holding and Washington and Tehran are still engaged in negotiations. “While geopolitical headlines remained in focus, particularly amid reports that the US had struck targets adjacent to the Strait of Hormuz, the fact of the matter remains that not only does the ceasefire continue to hold, per comments from President Trump, but also that talks between the US and Iran have continued, with progress towards a deal continuing to be made,” said Michael Brown, senior research strategist at Pepperstone.
Focus on Strait of Hormuz
Oil prices have swung wildly since the beginning of the conflict, now its third month. Prices edged towards $120 a barrel when Tehran launched strikes on the UAE, in retaliation against attempts by the US to escort commercial vessels out of the strait.
But they slumped on Wednesday, down more than 10 per cent, when the US suspended its naval escort operations.
The UAE on Friday activated its air defence systems once again to deal with Iranian drone and missile threats, the Ministry of Defence said in a post on X.
As the Iran launches attacks, all eyes remain fixed on the strait, which has been effectively closed since the conflict began on February 28. The closure of the vital waterway has resulted in an unprecedented supply shock to the global energy markets.
A fifth of global oil and gas supplies were normally shipped through the strait before the conflict began.
Wall Street record
A global equities rally, driven by record corporate earnings and hope of a US-Iran deal, is also losing steam owing to the latest escalation in Hormuz.
But Wall Street bucked that trend at the close on Friday, with the S&P 500 and Nasdaq Composite posting records on the strength of the AI sector. US indices dropped at the close on Thursday amid the US-Iran exchange of fire and Mr Trump's threats to hit Iran harder if it failed to sign a deal soon.
The benchmark S&P closed 0.84 per cent higher, while the tech-rich Nasdaq jumped 1.7 per cent, buoyed by gains in Nvidia, Sandisk and other AI shares, as well as a solid jobs report. The Dow Jones Industrial Average was virtually flat.
Earlier in Asia, stocks broadly fell, retreating from record closes earlier in the week on technology stock-driven boost.
But despite the drops across most Asian markets on Friday, Asian equities posted a fifth week of gains, the longest winning streak since January, Bloomberg data shows.
Japan’s Nikkei 225 settled 0.19 per cent lower while Hong Kong's Hang Seng fell 0.87 per cent. Australia's S&P ASX 200 also retreated 1.51 per cent, while China’s Shanghai Composite ended flat. Stocks in India declined 0.66 per cent.
“We have no idea how the situation will evolve, but the track record of the past two months is not really encouraging and the Friday close is always a critical moment,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “The US tends to make decisive moves during no-market hours to give investors time to digest the information, hoping to push volatility into Monday and eventually drown out bad news with encouraging – often unfounded – announcements.”
In Europe, London's FTSE 100 closed 0.43 per cent lower, while Frankfurt's Dax fell 1.32 per cent and Paris' CAC 40 retreated 1.09 per cent.
