New York (TDI): Global financial markets ended the week under pressure as escalating tensions surrounding Iran raised fresh concerns about energy supplies and inflation, sending oil prices sharply higher while strengthening the US dollar.
Investor sentiment turned cautious on Friday as uncertainty over the conflict in the Middle East continued to ripple through global markets. Rising fears of supply disruptions pushed crude prices upward, adding to worries about fuel costs and interest rate outlooks.
Oil prices surged past the $100 per barrel mark, even after an Indian tanker successfully navigated the Strait of Hormuz and the United States introduced limited measures aimed at easing supply pressures.
Major US stock markets closed the day and the week in negative territory. The Dow Jones Industrial Average slipped 0.25 percent, while the S&P 500 declined by 0.6 percent. The technology‑heavy Nasdaq Composite recorded the largest drop among the three, falling 0.9 percent.
European equities also weakened. The pan‑European STOXX 600 index fell 0.5 percent, and MSCI’s global equity index dropped 0.9 percent as investors reacted to geopolitical uncertainty.
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Meanwhile, the US dollar continued to attract demand as a safe‑haven currency during the turmoil. The greenback gained for a second straight week and rose 0.8 percent on Friday against a basket of major currencies.
Oil markets remained the primary driver of market sentiment. US President Donald Trump said Washington would intensify its actions against Iran in the coming days. Shortly after those remarks, the administration issued a limited 30‑day waiver allowing certain purchases of sanctioned Russian oil in an attempt to stabilize prices.
West Texas Intermediate crude for the front month settled at $98.71 per barrel, marking a 3.11 percent increase. Brent crude climbed 2.67 percent to close at $103.14 per barrel, moving above the $100 level for the first time since August 2022.
Traders and analysts are closely watching developments in the region as they try to assess how long potential disruptions to oil supplies could last.
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Tensions have intensified as Iran increased attacks across parts of the Middle East. The country’s new Supreme Leader, Mojtaba Khamenei, has vowed to maintain pressure on the Strait of Hormuz, a crucial shipping route for global energy supplies. Investors now fear that a prolonged standoff could keep oil prices elevated for an extended period.
Higher oil prices have also revived concerns about inflation, forcing markets to reassess expectations for central bank policy this year. Traders who previously anticipated multiple interest‑rate cuts from the Federal Reserve are now expecting far less easing.
Two‑year US Treasury yields, which tend to reflect expectations about Federal Reserve policy, recently climbed to their highest level in about six months.
Economic data released on Friday showed that the Personal Consumption Expenditures index, the inflation gauge most closely watched by the Federal Reserve, rose 0.3 percent in January on a monthly basis, matching economists’ forecasts.
Gold prices, which often rise during periods of geopolitical tension, moved in the opposite direction this time. The metal fell 1.27 percent to $5,014 per ounce on Friday, extending its losses for the week.
