SEOUL, March 10 (AJP) - The ongoing conflict in the Middle East is rattling global financial markets. Yet the main driver of daily volatility has been the mixed signals about it, rather than the conflict itself.
Even a single remark from U.S. President Donald Trump has triggered rapid market swings, sending oil prices and stock indexes soaring or tumbling.
In just a few days, crude prices have taken a roller-coaster ride. Brent crude surged to as high as $119 a barrel in Asian trading before sliding back to around $80. The intraday swing approached 30 percent — a level of volatility rarely seen in recent years.
Global markets moved just as sharply. South Korean stocks swung from a steep selloff to a rebound in a single day. The country's benchmark KOSPI, after plunging the day before, surged more than 5 percent on Tuesday, while the junior KOSDAQ rose nearly 4 percent. The South Korean won also shifted rapidly against the U.S. dollar, moving from the 1,490-won range to around 1,470 won.
Market swings have not been driven by economic fundamentals, as global oil demand has not suddenly collapsed, nor has supply instantly recovered. Instead, markets reacted sharply after Trump's comments that the Middle East conflict is "going to be ended soon." But he also warned, "If it starts up again, they'll be hit even harder."
Trump said the war in Iran is "very complete, pretty much," while also saying later in the day, "We could go further. And we're going to go further." With these flip-flops, markets have struggled to stay steady.
Iranian religious leaders chose him despite advance warnings from the United States and Israel, a decision seen as a political message that Iran will not yield to outside pressure.
The complex nature of the Middle East conflict also suggests longer-term uncertainty. In Iran, Mojtaba Khamenei, widely regarded as a hard-liner, has been elected the country's new supreme leader following the death of his father Ali Khamenei, who ruled Iran with an iron fist for decades. Iranian clerics chose him despite prior warnings from the U.S. and Israel, a decision widely seen as a political message that Iran will not yield to outside pressure.
Russia and China have both recognized Mojtaba's leadership and expressed support for Iran, making the situation far more complicated than a regional dispute. With major world powers aligned on opposing sides, the war is unlikely to be resolved quickly.
Energy markets are also at risk. Analysts warn that if the Strait of Hormuz, which handles about one-fifth of global oil supply, were blocked, the world could face a shortfall of more than 14 million barrels a day.
Some Wall Street analysts warn that oil prices could surge to as high as $150 a barrel. The Group of Seven (G7)'s consideration of releasing strategic petroleum reserves reflects these concerns. The Paris-based International Energy Agency says its member countries hold about 1.8 billion barrels in reserves, which could, in theory, cover Middle East supply disruptions for roughly four months. However, reserves are intended to cushion short-term shocks, not provide a lasting solution if the war drags on.
The bigger problem for markets isn't just rising prices - it's the lack of confidence. When a leader's words spark panic rather than provide clarity, investors are left with no reliable ground. Markets thrive on stability, and restoring it will require consistent policy, careful diplomacy, and a coordinated global response to the crisis.
After the 1973 oil shock, major powers established strategic petroleum reserves for exactly that reason. The same holds true today, as markets need clear and trustworthy policy direction and a strategy built on international coordination, not mixed political signals.
The global economy is already grappling with high interest rates and geopolitical tensions. If leaders' remarks add another source of uncertainty, the burden ultimately falls on markets and the public. What the world needs now is steady, reliable leadership that markets can rely on.
Even a single remark from U.S. President Donald Trump has triggered rapid market swings, sending oil prices and stock indexes soaring or tumbling.
In just a few days, crude prices have taken a roller-coaster ride. Brent crude surged to as high as $119 a barrel in Asian trading before sliding back to around $80. The intraday swing approached 30 percent — a level of volatility rarely seen in recent years.
Global markets moved just as sharply. South Korean stocks swung from a steep selloff to a rebound in a single day. The country's benchmark KOSPI, after plunging the day before, surged more than 5 percent on Tuesday, while the junior KOSDAQ rose nearly 4 percent. The South Korean won also shifted rapidly against the U.S. dollar, moving from the 1,490-won range to around 1,470 won.
Market swings have not been driven by economic fundamentals, as global oil demand has not suddenly collapsed, nor has supply instantly recovered. Instead, markets reacted sharply after Trump's comments that the Middle East conflict is "going to be ended soon." But he also warned, "If it starts up again, they'll be hit even harder."
Trump said the war in Iran is "very complete, pretty much," while also saying later in the day, "We could go further. And we're going to go further." With these flip-flops, markets have struggled to stay steady.
Iranian religious leaders chose him despite advance warnings from the United States and Israel, a decision seen as a political message that Iran will not yield to outside pressure.
The complex nature of the Middle East conflict also suggests longer-term uncertainty. In Iran, Mojtaba Khamenei, widely regarded as a hard-liner, has been elected the country's new supreme leader following the death of his father Ali Khamenei, who ruled Iran with an iron fist for decades. Iranian clerics chose him despite prior warnings from the U.S. and Israel, a decision widely seen as a political message that Iran will not yield to outside pressure.
Russia and China have both recognized Mojtaba's leadership and expressed support for Iran, making the situation far more complicated than a regional dispute. With major world powers aligned on opposing sides, the war is unlikely to be resolved quickly.
Energy markets are also at risk. Analysts warn that if the Strait of Hormuz, which handles about one-fifth of global oil supply, were blocked, the world could face a shortfall of more than 14 million barrels a day.
Some Wall Street analysts warn that oil prices could surge to as high as $150 a barrel. The Group of Seven (G7)'s consideration of releasing strategic petroleum reserves reflects these concerns. The Paris-based International Energy Agency says its member countries hold about 1.8 billion barrels in reserves, which could, in theory, cover Middle East supply disruptions for roughly four months. However, reserves are intended to cushion short-term shocks, not provide a lasting solution if the war drags on.
The bigger problem for markets isn't just rising prices - it's the lack of confidence. When a leader's words spark panic rather than provide clarity, investors are left with no reliable ground. Markets thrive on stability, and restoring it will require consistent policy, careful diplomacy, and a coordinated global response to the crisis.
After the 1973 oil shock, major powers established strategic petroleum reserves for exactly that reason. The same holds true today, as markets need clear and trustworthy policy direction and a strategy built on international coordination, not mixed political signals.
The global economy is already grappling with high interest rates and geopolitical tensions. If leaders' remarks add another source of uncertainty, the burden ultimately falls on markets and the public. What the world needs now is steady, reliable leadership that markets can rely on.
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