Oil prices rise, stocks mixed ahead of crucial US inflation data

Global oil prices continued their upward trend on Wednesday, driven by ongoing geopolitical tensions and market anticipation of key US economic data. Crude oil contracts saw gains, adding to a roughly 14 percent surge over the past week, as traders remained nervous ahead of the release of the US consumer price index (CPI).

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Crude oil prices have surged in the last few days because the Strait of Hormuz remains effectively shut, and there are no signs of progress between the US and Iran.

This inflation data is closely watched as it could provide crucial guidance for the Federal Reserve's future monetary policy, particularly regarding interest rates. Following a recent report indicating job losses in the US economy, coupled with inflation remaining stubbornly above the Fed's target, speculation is mounting about potential rate hikes.

The conflict between the United States and Iran over the Strait of Hormuz remains a significant factor influencing oil prices. Despite a brief glimmer of hope regarding potential arrangements, positions have hardened, with both nations issuing demands for compensation. A US military statement confirmed a helicopter fired missiles at a Panama-flagged cargo ship attempting to breach the American blockade of Iranian ports.

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The latest headlines around talks between Oman and Iran provided some relief, but we shouldn't confuse talks with an actual breakthrough. Iran has come out saying that the Strait of Hormuz will remain shut until their conditions are met.

Meanwhile, equity markets experienced fluctuations. Seoul's stock exchange, the Kospi, however, recorded a strong performance, climbing over 3 percent. This rise was bolstered by gains in chipmakers like SK Hynix and Samsung, which had previously suffered significant losses. Positive earnings reports from US AI giants also provided some relief to market concerns.

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any potential deal is still some way off, meaning risks remain skewed to the upside for oil prices.