With rising oil prices and geopolitical uncertainties, Asia markets fell Tuesday morning.
Japan’s Nikkei 225 lost 0.12%, although the Topix index rose 0.28%. Falling also was South Korea’s Kospi index, losing 0.13%.
Most sectors in Australia’s S&P/ASX 200 suffered losses, thus the index dropped 0.3%, while the energy subindex rose 0.57%.
The three Chinese major markets opened the session lower. The Shanghai composite, the Shenzhen composite, and the Shenzhen component all fell 0.45%, 0.5%, and 0.54%, respectively. Hongkong’s Hang Seng index lost 0.95%.
After rising in the previous session by more than 14%, the West Texas Intermediate slightly pulled back on Tuesday morning, losing 1.83% to $61.75 per barrel. International benchmark Brent also retreated. It lost 1.55% to $67.95 after gaining 14% in the previous session.
Drone Attacks on Saudi’s Oil Facilities
The surge in oil prices came after drone attacks on Saudi Arabia’s production facilities knocked out more than 5% of the world’s oil supply. The Yemen’s Houthi rebels took responsibility of the attack. However, a Saudi-lead military coalition said the attack was carried out with Iranian weapons. This has given the Trump administration enough reason to believe that Iran was behind the deadly attack.
Saudi Arabia’s national petroleum company, Saudi Aramco, said it planned to restore about a third of its crude production by Monday.
Oil price saw a surge after President Trump authorized the release of oil from the Strategic Petroleum Reserve if needed.
Several analysts said oil prices are likely to remain expensive and volatile.
National Australia Bank’s senior foreign exchange strategist Rodrigo Catril said, “the surge in oil prices also reflects an increase in geopolitical premium. For now is probably safe to say that there is a lot that we don’t know and as such oil prices are likely to remain elevated and volatile”.
Also read: 5 Nations that Move the Oil Market
