Oil prices climbed Wednesday as attacks in the Middle East undermined peace efforts, with a drone strike injuring dozens at Kuwait International Airport and disrupting flights. Iranian and US forces exchanged attacks in the Gulf, contributing to regional instability. Brent North Sea Crude rose 2.4 percent to $98.22 a barrel, while West Texas Intermediate reached $95.97, also up 2.4 percent. The conflict has disrupted global economic prospects, the OECD warned, forecasting world growth at 2.8 percent for the year if Gulf energy exports resume by the third quarter.
OECD chief economist Stefano Scarpetta said prolonged disruptions would increase economic and social costs, with investment declines—especially in energy-heavy AI—potentially raising unemployment. The Japanese cabinet approved a $19 billion supplementary budget to assist households facing rising living costs linked to the war. The yen strengthened as traders speculated on possible intervention by Japanese authorities following last month's currency support measures.
Stock markets showed mixed results. Tokyo's Nikkei 225 closed up 2.5 percent at 68,402.13, driven by gains in chipmaker Tokyo Electron. Taiwan Semiconductor Manufacturing Company boosted Taipei's index by two percent. Shanghai, Sydney, Singapore and Manila advanced, but Hong Kong's Hang Seng fell 1.6 percent to 25,633.21 and Mumbai declined. Jakarta dropped over five percent due to concerns over oil prices and fiscal conditions. Seoul was closed for a holiday.
In Europe, London's FTSE 100 dipped 0.3 percent to 10,340.82, Paris's CAC 40 fell 0.3 percent to 8,181.88, and Frankfurt's DAX dropped 1.0 percent to 24,871.85. The dollar firmed against major currencies, while the euro weakened to $1.1617 from $1.1634. The pound slipped to $1.3450 from $1.3470. The dollar-yen rate fell to 159.79 from 159.92.
US markets closed higher Tuesday, with the S&P 500 and Nasdaq hitting record highs. Marvell Technology surged over 32 percent after Nvidia CEO Jensen Huang described it as the next trillion-dollar company. US job openings rose in April to their highest level in nearly two years, ahead of Friday's employment data that may influence Federal Reserve rate decisions.
IG chief market analyst Chris Beauchamp noted that despite geopolitical tensions, investor focus remained on artificial intelligence, with tech announcements shaping market sentiment more than Middle East developments.
The OECD warns prolonged Middle East conflict will deepen global economic costs, yet investors pour money into energy-intensive AI projects that depend on stable energy supplies. This contradiction risks worsening instability just as nations like Japan commit billions to offset inflation from the same war. While stock markets rally on tech hype, real economies face mounting pressure from disrupted trade and rising oil prices. The disconnect between financial optimism and material reality grows wider by the day.
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