ASX set to slide, Middle East attacks trigger Wall Street slump; Oil prices surge
Oil prices leaped, and Wall Street stocks slumped on Friday on worries that escalating violence following Israel's attack on Iranian nuclear and military targets could damage the flow of crude around the world, along with the global economy.
The S&P 500 sank 1.1 per cent and wiped out what had been a modest gain for the week. The Dow Jones Industrial Average dropped 769 points, or 1.8 per cent, and the Nasdaq composite lost 1.3 per cent.
The Australian sharemarket is set to retreat, with futures on Saturday pointing to a loss of 23 points, or 0.3 per cent, at the open. The Australian dollar retreated. It was fetching 64.85 US cents at 5.21am AEST.
The strongest action was in the oil market, where the price of a barrel of benchmark US crude jumped 7.3 per cent to $US72.98. Brent crude, the international standard, rose 7 per cent to $US74.23 for a barrel.
Iran is one of the world's major producers of oil, though sanctions by Western countries have limited its sales. If a wider war erupts, it could slow the flow of Iran's oil to its customers and keep the price of crude and petrol higher for everyone worldwide.
Beyond the oil coming from Iran, analysts also pointed to the potential for disruptions in the Strait of Hormuz, a relatively narrow waterway off Iran's coast. Much of the world's oil that's been pulled from the ground moves through it on ships.
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Past attacks involving Iran and Israel have seen prices for oil spike initially, only to fall later 'once it became clear that the situation was not escalating and there was no impact on oil supply,' according to Richard Joswick, head of near-term oil at S&P Global Commodity Insights.
That has Wall Street waiting to see what will come next. US stock prices dropped to their lowest points for the day after Iran launched ballistic missiles toward Israel.
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