Stock markets wavered while oil prices extended a rally Wednesday as Iran鈥檚 missile attack on Israel fanned fears of a Middle East-wide conflict.
Brent crude, the international benchmark, topped $75 per barrel while West Texas Intermediate, the US contract, was above $72, with both more than three per cent higher.
Iran launched its second direct attack on Israel in history on Tuesday, firing what it said were 200 missiles in retaliation for the killings of Tehran-backed militants.
Israeli Prime Minister Benjamin Netanyahu vowed to make Iran 鈥榩ay鈥� for its 鈥榖ig mistake鈥� while Tehran warned Wednesday that it would launch an even bigger attack if it is targeted.
The attack sent oil prices surging by as much as five per cent on Tuesday.
鈥業t is all about Middle East conflict now, when it comes to oil prices,鈥� said Fawad Razaqzada, analyst at City Index and Forex.com.
鈥楾he extent of Israel鈥檚 potential response to Iran will influence how much further geopolitical risk markets are likely to factor in,鈥� he said.
Prices could fall if Israel鈥檚 has a 鈥榤easured鈥� response and avoids hitting Iran鈥檚 nuclear facilities, he said.
鈥楬owever, if Israel lures in the US in its fight, or responds with an even bigger attack this time, then watch out for oil prices to potentially sky rocket,鈥� Razaqzada added in a note.
Naeem Aslam, analyst at Zaye Capital, said prices could be 鈥榝lirting near the $100鈥� mark if a really serious threat materialises.
Oil prices had been struggling this year due to concerns over weakness in the Chinese聽economy聽and expectations of higher production from Saudi Arabia and seven other members of the OPEC+ crude cartel.
鈥榃ith Israel now expected to retaliate, the chances of further escalation are high, prompting a pivot in (oil) market sentiment from concerns over excess supply to fears of shortages,鈥� said Ricardo Evangelista, senior analyst at ActivTrades.
Equity markets were mixed in Europe and New York, with the Dow flat and the tech-heavy Nasdaq and broad-based S&P 500 in the red in early trading.
Frankfurt fell and Paris was flat in afternoon deals but London鈥檚 top-tier FTSE 100 index rose slightly, helped by share-price gains for oil giants BP and Shell.
Hong Kong鈥檚 stock market surged more than six per cent by the close, continuing a sharp rally after China last week unveiled a raft of measures to boost its聽economy, particularly the troubled property sector.
Markets were closed in Shanghai and Shenzhen for a week-long holiday, having also zoomed higher before the break. Tokyo fell more than two per cent.
Property developers led the surge in Hong Kong on Wednesday, with Agile Group rocketing 160 per cent higher and Sunac China Holdings up more than 75 per cent.聽
However, the firms were still at just a fraction of their prices three years ago.
While the Middle East conflict has investors worried, they remain focused on the US Federal Reserve鈥檚 future plans for interest rates and will look closely at jobs data Friday for clues about the central bank鈥檚 next move.