Bangkok BangkokWall Street futures were mixed on Wednesday morning, while oil prices steadied after President Donald Trump said the US Navy could escort tankers through the Strait of Hormuz, through which about a fifth of the world’s oil passes. S&P 500 futures fell 0.1% before the bell and Dow Jones Industrial Average futures slipped 0.2%. Nasdaq futures were much the same. Oil prices have increased by about 11 percent since America and Israel attacked Iran five days ago. On Tuesday, Trump announced that he has ordered the US Development Finance Corp. to provide political risk insurance and guarantees for the financial security of all maritime trade.
“If necessary, the United States Navy will immediately begin escorting tankers through the Strait of Hormuz,” Trump said in a social media message posted by the White House. US benchmark crude oil prices fell slightly to USD 73.94 per barrel on Wednesday morning. International standard Brent crude fell 37 cents to USD 81.03 a barrel. “Trump’s assurance that the US will provide shipping insurance against the risks of war in the Middle East and even US Navy escorts only mitigates, not eliminates, the risks posed by continued oil price rises,” Mizuho Bank said in a commentary. It said increased shipping insurance costs would ultimately result in additional costs of USD 5 to USD 15 per barrel, adding that “the ‘war premium’ remains in full force.”
Concerns about the war, which Trump has said could last a month or more, have hit world markets, unsettling investors who fear further oil price rises could weaken the global economy and cut corporate profits. “I think the Iran situation is getting out of hand, and I think US President Donald Trump has misjudged it terribly,” said Francis Lunn, CEO of VentureSmart Asia. “The situation is very bad.” Some analysts say that if the war ends soon, stocks may rise. If this drags on, higher inflation caused by rising energy prices could tie the Federal Reserve’s hands and prevent it from lowering interest rates.
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