Oil prices rose on Thursday amid heightened geopolitical tensions between the United States and Iran, while major stock indices in the U.S. and Europe declined, reversing earlier gains in Asia.
Brent crude increased by 1.7% to $71.57 per barrel, and West Texas Intermediate rose 2.0% to $66.37, reaching a six-month high. The rally was driven by concerns that nuclear negotiations may fail, raising the risk of conflict that could disrupt Middle Eastern energy supplies. The White House had previously warned Iran it would be “wise” to reach a deal, while President Donald Trump reiterated hints of a possible military strike and the U.S. military buildup in the region continued.
“The geopolitical premium is clearly back in play,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown. “Nuclear talks between the two sides appear to be going nowhere fast.”
The rising oil costs contributed to a cautious tone on equity markets. In the U.S., the Dow Jones, S&P 500, and Nasdaq Composite all traded lower by late morning. Analysts noted that minutes from the Federal Reserve’s latest policy meeting, released on Wednesday, were interpreted as more hawkish than expected, suggesting interest rates might remain higher for longer. Some Fed officials indicated they want to see further progress on inflation before endorsing another rate cut, with one even suggesting a hike could be next.
“These were viewed as more hawkish than expected, and this added some downward pressure on equities,” said David Morrison of Trade Nation. “Recent strong data on the U.S. economy has suggested that the Fed might not need to cut rates any time soon.”
Corporate earnings also influenced market moves. Walmart shares initially rose on solid fourth-quarter results but later turned negative. In Europe, the FTSE 100, CAC 40, and DAX all closed lower, weighed down by disappointing updates. Airbus shares fell 7.2% after its annual results missed expectations, while Renault dropped 3.1% despite higher sales, warning of squeezing profit margins from its electric vehicle push. Mining giant Rio Tinto and energy group Centrica also pressured the London market.
In Asia, markets rebounded strongly after the Lunar New Year break. South Korea’s Kospi jumped over 3% to a record high, led by chipmakers Samsung and SK Hynix. Japan’s Nikkei also advanced. Analysts noted that investors are increasingly attracted to relatively cheaper technology stocks in the region following the AI-driven surge in U.S. markets over the past two years.
The day’s movements underscore how financial markets are navigating conflicting forces: persistent geopolitical risks supporting oil prices and hawkish central bank signals pressuring equities, while firm economic data and corporate performance create a complex backdrop for investor decisions.
