Oil prices surge, global stocks climb on AI demand and Middle East tensions

Global stock markets experienced a significant rally, with Japan's Nikkei 225 index hitting a record high, fueled by persistent investor enthusiasm for artificial intelligence-related sectors. The positive sentiment extended across the Asia-Pacific region, with markets opening higher.

“

The market is now re-incorporating the risk premium into oil prices following the halt in negotiations between the two countries.

Meanwhile, crude oil prices continued their upward trajectory, with Brent crude nearing $98 per barrel and West Texas Intermediate (WTI) also seeing gains. This rise is attributed to the stagnation of peace talks in the Middle East, which has reintroduced risk premiums into oil pricing. Analysts suggest that the risk of elevated oil prices remains substantial.

“

The risk of oil prices remaining high is still significant. If the situation in the Strait of Hormuz does not return to normal in the near future, Brent prices have the potential to remain in the range of $90 to $110 per barrel.

Professor Madya Dr. Aimi Zulhazmi Abdul Rashid from Universiti Kuala Lumpur's Faculty of Business noted that Brent crude futures for July 2026 are trading around $92 per barrel. He warned that if the situation in the Strait of Hormuz does not normalize soon, Brent prices could remain within the $90 to $110 per barrel range. Investors are closely monitoring several key factors, including shipping traffic in the Strait of Hormuz, war risk insurance premiums for vessels, global oil inventory levels, and diplomatic developments between the U.S. and Iran, as political statements can rapidly shift market sentiment.

“

Investors need to monitor four key factors: the movement of ship traffic in the Strait of Hormuz, the war risk insurance premium for ships, global oil inventory levels, and diplomatic developments between the U.S. and Iran, as any political statement can quickly change market sentiment.

The disruption in this strategic shipping lane not only impacts the global energy market but also influences investment flows. The energy and plantation sectors in Malaysia are expected to benefit from higher oil prices. Conversely, airlines, transportation, and consumer sectors face increased cost pressures due to rising fuel expenses. Companies like Petronas, Dialog Group, Yinson Holdings, and Velesto Energy are positioned to profit from the higher oil prices, while airlines, whose jet fuel costs constitute about 35% of their operating expenses, are expected to be significantly affected.

“

Disruption in this strategic shipping lane not only affects the global energy market but also triggers changes in investment flows in the stock market.