Oil nears $100 as US-Iran tensions escalate

Oil prices surged toward US$100 a barrel on Wednesday as attacks between the United States and Iran escalated, with a drone strike on Kuwait International Airport killing one person and wounding dozens just days after U.S. forces repelled Iranian ballistic missiles and drones and launched retaliatory strikes on Qeshm Island in the Persian Gulf. The violence dashed hopes for an imminent peace deal, as Iranian Foreign Minister Abbas Araghchi said no tangible progress had been made in negotiations to end the conflict. Israeli Prime Minister Benjamin Netanyahu warned that Israel and U.S. forces are prepared to strike Iran again if necessary, telling CNBC that Tehran is "playing with fire." Global stock markets tumbled in response to the escalating tensions. Wall Street indexes fell with the Dow Jones Industrial Average dropping 1.21 percent, the S&P 500 sinking 0.74 percent, and the Nasdaq Composite shedding 0.89 percent. Asian markets followed suit, with South Korea's Kospi falling 2.05 percent and Japan's Nikkei 225 poised to decline from its record high. Oil futures climbed sharply, with West Texas Intermediate closing at US$96.02 per barrel and Brent crude settling at US$97.81. However, AI-related stocks offered a bright spot, with U.S. chipmaker Marvell Technology soaring 32 percent after Nvidia CEO Jensen Huang hailed it as the next trillion-dollar firm. The Organization for Economic Cooperation and Development warned Wednesday that global economic growth is forecast to slip to 2.8 percent this year even if Gulf energy exports return to pre-conflict levels in the third quarter, noting that many countries risk falling into recession should the disruptions continue into 2027. OECD chief economist Stefano Scarpetta said the longer the disruptions last, the larger the economic and social costs become, with a drop in investment spending likely to push up unemployment. Meanwhile, U.S. data showing the services sector expanded in May and private sector employment grew more than expected offered some relief, with Friday's employment report now crucial in determining whether the Federal Reserve will maintain or raise interest rates to combat inflation.