Oil prices continue to rise amid escalating geopolitical tensions

On Thursday, trading on the US stock market concluded with a decline. By the end of the day, the Dow Jones index (US30) fell by 0.54%. The S&P 500 (US500) declined by 0.28%. The tech-heavy Nasdaq (US100) closed lower by 0.41%. The catalyst for profit-taking was the FOMC minutes, which pointed to the risk of prolonged deflation and the permissibility of additional policy tightening, heightening investor caution. Against this backdrop, long-term government bond yields rose. Rising commodity prices supported the energy sector, while banking stocks came under pressure.

European markets ended the day with a drop. Germany’s DAX (DE40) declined by 0.93%, France’s CAC 40 (FR40) closed down 0.36%, Spain’s IBEX 35 (ES35) fell by 0.99%, and the UK’s FTSE 100 (UK100) closed at negative 0.55%. Within the European region, investor sentiment is dictated by potential reshuffles in the financial leadership. Reports of a likely early resignation of Christine Lagarde as head of the ECB, as well as the resignation of Bank of France Governor François Villeroy de Galhau in June 2026, are creating a backdrop of political uncertainty. Despite the personnel rumors, a stable inflation level in the Eurozone suggests that the regulator will keep current monetary policy parameters unchanged until the end of this year.

WTI oil quotes closed in on the $66.5 per barrel mark, hitting half-year highs amid a sharp escalation of geopolitical tensions. The primary driver of growth is the risk of a large-scale military conflict between the US and Iran, fueled by statements regarding a potential forceful operation and Israel’s demands for a change in Tehran’s political course. The situation is exacerbated by a narrowing diplomatic space for maneuver and the potential threat of a blockade of the Strait of Hormuz, which is a key artery for one-third of the world’s maritime hydrocarbon exports. In parallel with foreign policy factors, price support came from unexpected data from the US Department of Energy, which recorded a rapid drop in domestic crude reserves by 9 million barrels. This significant decline in inventories during the second week of February completely refuted conservative analyst prognoses that had expected a moderate market surplus.

Natural gas prices (XNG) in the US stabilized around $3.0 per MMBtu, holding near four-month lows amid a noticeable weakening of the market balance. A key downward factor is the active recovery of production in the Lower 48 states, which in February approached historic highs, reaching 108.7 billion cubic feet per day (bcf/d). Despite continued LNG exports at record levels, total supply confidently covers current system requirements, neutralizing concerns regarding resource shortages. EIA data confirms that the rate of inventory decline is trailing both last year’s figures and the five-year averages. Although the current volume of reserves remains 6% below the norm, experts expect this gap to be fully eliminated by the beginning of March. The combination of excess production and expected warming deprives quotes of growth incentives, consolidating the downward trend in the gas segment.

Asian markets traded mostly higher yesterday. Japan’s Nikkei 225 (JP225) rose by 0.57%, China’s FTSE China A50 (CHA50) did not trade due to Lunar New Year celebrations, Hong Kong’s Hang Seng (HK50) also did not trade, and Australia’s ASX 200 (AU200) showed a positive result of 0.88%.
The New Zealand dollar (NZD) showed a notable weakness, settling at a four-week low near the $0.595 level. Pressure on the currency was exerted by the rhetoric of the new head of the Reserve Bank of New Zealand (RBNZ), Anna Breman, who, after maintaining the base rate at 2.25%, signaled no rush to tighten monetary conditions. Although inflation at the end of 2025 slightly exceeded the target range, reaching 3.1%, the regulator expressed confidence in its return to the 2% target within the year without aggressive intervention. A revision of investor expectations led to a sharp drop in the probability of a rate hike in the coming months: the chances of an increase in September plunged from 68% to 40%.

Bank Indonesia (BI) in February 2026 maintained its benchmark interest rate at 4.75%, which was fully in line with analyst projections. This decision by the regulator was dictated by the need to stabilize the national currency, which is under pressure near historic lows due to risks of sovereign rating downgrades by Moody’s and MSCI. Against a backdrop of global financial volatility, the central bank aims to keep inflation within the target corridor and ensure the sustainability of economic growth.