Oil prices surge on Red Sea escalation
Oil prices surged four percent on Jan. 12 after U.S. and UK forces launched strikes against Iran-backed Houthi rebels following their attacks on ships in the Red Sea.
Tokyo and European stock markets ended the week with strong gains as traders brushed off data showing U.S. inflation rose more than expected in December.
Wall Street had ended flat on Jan. 11, while the dollar was closing the week with gains against the euro.
"The fear in the oil market is that the region is on an unpredictable escalating path, where at some point down the road supply of oil will indeed in the end be lost," noted Bjarne Schiliro, chief commodities analyst at SEB bank.
The Houthis have carried out a growing number of strikes on vessels in the Red Sea, a key international shipping route, since the Gaza war erupted in October.
The attacks have affected trade flows at a time when supply strains are putting upward pressure on inflation globally. The jump in oil prices sparked concerns about a fresh spike in inflation that could complicate central bank efforts to cut interest rates.
Electric car manufacturer Tesla also announced it is suspending for two weeks the bulk of production at its factory in Germany, citing a shortage of parts due to shipping delays caused by Houthi rebel attacks in the Red Sea.
