[US Stock Market] G7 fails to reach consensus on releasing oil reserves; oil prices rise 10%, Dow Jones drops nearly 900 points (updating)

The market is awaiting an emergency meeting of G7 finance ministers to discuss a coordinated release of strategic oil reserves led by the International Energy Agency (IEA) to address the surge in oil prices following the Gulf conflict. As of 2022 data, IEA member countries’ emergency oil reserves under OECD government control are estimated to exceed 1.2 billion barrels, mostly crude oil.

According to IEA regulations, all member countries must maintain emergency oil reserves equivalent to at least 90 days of net imports. This government-controlled stockpile must ensure the country can sustain normal consumption for at least three months.

The Iran conflict has driven oil prices higher, with Brent crude rising nearly 30%, approaching $120 per barrel at one point. The gains have since narrowed, with the latest increase around 10%, hovering near $100.

The three major U.S. stock indices declined, with the Dow dropping 886 points to 46,615, the S&P 500 down 1.5% to 6,638, and the Nasdaq falling 1.4% to 22,084.

The U.S. dollar index rose 0.5%, temporarily breaking above 99 at 99.35. Market concerns over rising oil prices fueling inflation have decreased the likelihood of rate cuts by the Federal Reserve. The yield on the 10-year U.S. Treasury continues to climb, currently at 4.175%.

Tech stocks weakened, with Tesla (US: TSLA) down nearly 4%, Amazon (US: AMZN), and Meta (US: META) both falling over 2%.

Additionally, U.S. markets have entered daylight saving time, opening an hour earlier at 9:30 p.m. Hong Kong time.

DWS notes that the oil market has entered a panic state, with prices fluctuating into triple digits, mainly driven by market sentiment, as the conflict itself has not seen any substantial changes. So far, supply disruptions are primarily due to cautious ships avoiding the Strait of Hormuz, causing trade delays rather than military blockades. However, it is expected that in the coming week and beyond, Middle Eastern oil supply could face shutdowns of up to 75%.

The firm states it will continue to monitor the situation closely. Currently, there is no significant damage to energy infrastructure, and Iran’s military strength appears to be waning. Solutions to ensure shipping through the Strait of Hormuz remain feasible. Amid the fog of war, a neutral stance on oil and natural gas is reaffirmed, with the expectation that energy prices will peak at or slightly above current levels.

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Market Trends:

[18:20] Dow futures down 492 points, Nasdaq futures down 1.1%. Oil prices surge over 10%, breaking $100. Markets open an hour earlier for daylight saving time.

[12:07] Dow futures down 1,006 points, at 46,511; S&P 500 futures down 130 points, at 6,613; Nasdaq futures down 542 points, or 2.2%, at 24,127.

[12:07] [Iran Crisis] Iran conflict impacts financial markets. Senior strategist Yardeni: The probability of a market crash in the U.S. stock market by the end of the year has increased to 35%.

[11:15] [700] Tencent reportedly plans to acquire Warner Bros. from Paramount in a multi-billion dollar deal.

[10:33] [Iran Crisis] Oil prices break $100, with NYMEX crude soaring 30%. Major Middle Eastern oil producers cut output.

[10:20] [Iran Crisis] Oil prices surge, dragging down Asia-Pacific stocks. “Black Monday” in the region, with Japan and South Korea down over 7%. South Korea reportedly considers implementing oil price caps.

[09:56] [Iran Crisis] JPMorgan: Middle Eastern oil capacity expected to decrease by 4 million barrels per day by next weekend.

[09:50] [Iran Crisis] Schroders’ Alex Tedder: Oil may reach $100. “I don’t plan to reduce energy holdings in the next two or three years.”

[08:17] [Iran Crisis] Gold drops over 2%, testing $5,000 level. Oil price surge heightens inflation concerns.

[07:30] [Iran Crisis] Black Monday begins, with oil prices rising 20%, surpassing $111. Trump: Small cost. Dow futures plunge 1,112 points (updating constantly).

[07:30] [Global Outlook] Focus on Middle East conflict and U.S. inflation data. Markets open an hour earlier for daylight saving time.

[07:30] Concerns over oil supply disruptions and worse-than-expected U.S. employment data caused a major sell-off last Friday. The Dow once fell 945 points to 47,009; the VIX volatility index surged 21.6% to 28.88. The Dow closed down 453 points, the S&P 500 fell 1.33%, and the Nasdaq declined 1.59%.

See the U.S. stock market close:

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Market activity last week, details at: [U.S. Market Close] Iran fires missiles at “Lincoln,” Brent surpasses $92, weak employment data causes Dow to fall 453 points, Nasdaq down 1.6%.