Saudis cut oil production, is an economic 'apocalypse' possible: online

The new working week started with a sharp rise in oil prices and a sell-off in stocks and bonds. Brent soared to $119.5 for the first time since 2022 before slowing slightly on news that G7 countries will discuss the use of oil from strategic reserves. Coal and gas prices also rose sharply. Asia, which is heavily dependent on Middle Eastern crude, panicked, with stocks in Japan down more than 5% and South Korea down nearly 6%. European bourses opened trading down more than 2%. American stock futures are also down. Follow what is happening online in this material.

Updated

12.05 CET: Saudi Arabia has started to cut oil production amid storage facilities filling up, Bloomberg reported, citing a source. The kingdom normally produces about 10 million barrels of oil a day and exports about 7 million. Earlier, national oil giant Aramco began transferring oil that would previously have been exported through the Strait of Hormuz to its port of Yanbu in the Red Sea to supply the global market. But the capacity of the pipeline that transports these volumes is insufficient to fully replenish export volumes, Bloomberg notes.

12.00 CET: The surge in oil prices has not yet brought the global economy closer to an "apocalypse", Pepperstone senior strategist Michael Brown told MarketWatch. According to him, traders' attention is now focused on how the Brent price will move away from the psychological $100 per barrel level, with the next level in focus being the highs reached in early 2022 - at which time Brent was trading above $130.

A price above $140 for Brent and $138 for WTI would be a "doomsday" for the US and global economies, Tyche Capital Advisors managing partner Tariq Zahir said in turn.

What else analysts are saying about oil:

- If the suspension of shipping through the Strait of Hormuz doesn't change very soon, "we face a potentially life-changing and unprecedented energy crisis," Neil Atkinson, former head of oil at the International Energy Agency, told CNBC.

Asked what this could mean for oil prices, Atkinson said:

- ExxonMobil Chief Economist Tyler Goodspeed voiced a gloomy forecast on CNBC:

- Societe Generale analysts warned that a prolonged production shutdown in the Middle East "significantly increases" the risk of complications in a subsequent restart.

11.44 CET: Qatar is delaying a major LNG expansion project until at least 2027 after being forced to shut down the world's largest LNG export facility, Ras Laffan, due to a drone attack, Bloomberg sources said. They said QatarEnergy expects to ship the first shipment from the North Field East facility early next year if operations at Ras Laffan resume in a month or sooner. A longer closure of the LNG complex due to the escalating war would delay the project further.

11.11 CET: What's happening in the markets right now:

- Brent futures for May delivery are up 11% to trade at $103.2 per barrel. The cost of WTI fell below $100 - the American oil is now trading at $99.4, adding 9%;

- The Stoxx 600 composite index of European stocks is down 1.6%. German and French stocks are down 1.6% and 1.7% respectively. British stocks (FTSE 100) lose 1.2%;

- the main indices on US stocks have slightly slowed down and are falling by 0.9-1%;

- The VIX index, known as Wall Street's fear gauge, has retreated from its highest level in almost a year - it is now adding 32% to surpass 31 points.

10.56 CET: C ult shortstop Michael Burry, known as the prototypical "Downgrade Game" character, has written a post on X, tagging Donald Trump in it.

"President Trump may have gotten himself into something that could become incredibly dangerous to the world if he shows again that a falling stock market is his kryptonite," he wrote.

Another prominent investor, Mark Mobius, released a note speculating on U.S. warfighting capabilities. He said that destroying Iran's nuclear facilities, located deep underground, "looks like a very difficult task." He also called the apparent discoordination within Iranian Xi a dangerous factor. He cited as an example of this the fact that Iran's president over the weekend apologized to regional neighbors for recent shelling, after which the shelling continued as if nothing had happened. Mobius said this could indicate that Iranian missile bases may be operating independently of each other.

10.35 CET: No matter how long the war in the Middle East lasts, the closure of the Strait of Hormuz is likely to be temporary, according to Fitch Ratings. Once tanker traffic resumes through the strait, oil prices should stabilize, Bloomberg quotes Angelina Valavina, head of EMEA issuers and commodities, as saying.

10.29 CET: Which stocks should investors look out for amid the oil price surge? The rally in energy stocks began before the Iranian crisis, but last week's gains have strengthened the sector considerably. Therefore, there are not many attractive oil company stocks left on the market, according to Investor's Business Daily. The publication's first choice was Vista Energy, a Latin American company with one of the highest composite ratings in the industry. The second recommendation, Colombia's Ecopetrol, has weak fundamentals but is interesting as a bet on an oil rally, IBD claims. Both companies are listed on the New York Stock Exchange.

The TipRanks platform on March 9 recommended buying "right now" two other oil stocks: Schlumberger and Targa Resources. It refers to the decision of Goldman Sachs to raise the target price of Schlumberger securities by 13%: the bank bets that the growth of activity in oil production due to high oil prices and high demand for Schlumberger's oilfield services will support the company's growth in the coming quarters. Morgan Stanley raised its target on Targa Resources shares by 12%, noting the new opportunities in global oil and gas markets that the company is facing due to the conflict in the Middle East, TipRanks reported.

10.05 CET: A Japanese refinery has offered Saudi Aramco to buy a shipment of oil from it at $30-40 per barrel above the so-called official selling prices, which are set monthly. Bloomberg calls it an illustration of how tight the oil market is right now.

09.45 CET: Coal prices jumped to their highest level since November 2024, soaring more than 9% on the back of rising oil and gas prices, Bloomberg reports. The Middle East's energy supply problems have forced buyers to look for alternatives, with some importers, notably Taiwan, considering increasing their use of coal-fired power plants if the Iranian crisis drags on.

09.30 CET: While the situation in the US market, where stock futures are losing up to 1.5%, looks tense, in Asia it is "frankly frightening", writes Barron's. Asia is particularly hard hit by the de facto closure of the Strait of Hormuz, as about 80% of the oil and gas that passes through that crucial waterway is headed there. Stocks and currencies across the region fell sharply on Monday amid fears that rising energy prices will stoke inflation.

South Korea's Kospi index closed trading down by almost 6%, while Japan's Nikkei 225 fell by more than 5%. Both countries are heavily dependent on oil imports from the Middle East. Hong Kong's Hang Seng index fell 1.4%. The Philippine peso, Indonesian rupiah and Indian rupiah reached record intraday lows against the dollar.

09.20 CET: European trading has started, with the Stoxx 600 composite index down around 2.3%, with all sectors except oil and gas selling off. France's CAC 40 stock index is down 2.4%, Germany's DAX down 2.5%. The British FTSE index fell by 1.6%.

09.15 CET: Bonds also suffered a sell-off. The yield on Australia's three-year government bond rose to its highest since 2011. The yield on benchmark 10-year US Treasuries rose by more than seven basis points, the biggest increase since January. Bond yields are moving inversely proportional to prices. Futures on German government bonds fell to a near 15-year low, Bloomberg writes.

Investors are now not looking at bonds as a traditional safe haven, Reuters notes. The reason is the intensification of inflationary concerns and the likelihood that central banks will have to keep rates elevated for longer or even increase the cost of borrowing.

09.05 CET: An escalating war and soaring oil prices hit airline stocks in Asian trading, adding pressure on carriers already struggling due to airspace closures in the Middle East. Quotes of Qantas Airways, Air New Zealand, Cathay Pacific, Japan Airlines and Korean Air Lines fell by 3.5-8.5%.

"If oil prices rise by 20 percent, jet fuel becomes several times more expensive as it becomes even more scarce. This significantly increases operating costs for companies, which are already rising due to staff costs after increased flight times in closed skies," Subhas Menon, head of the Association of Asia Pacific Airlines, told Reuters.

Operating conditions for airlines were difficult even before the Middle East crisis and the surge in oil prices due to political and economic uncertainty as well as component supply problems, said independent aviation analyst Brendan Sobey. "Now the already high level of uncertainty has increased further," he emphasized.

08.35 CET: The VIX index, known as the "Wall Street fear index", soared 47% to slightly above 35 points for the first time since April 2025. "The fear is not only palpable but measurable <...> (With the VIX index) above 35, there will be real panic in the stock markets," Christian Henke, chief market analyst at IG, wrote in a note quoted by Market Watch.

At the moment, futures on three major U.S. stock indexes are falling by 1.4-1.6%. The Russell 2000 index of small capitalization companies fell by 2.7%.

08.32 CET: In this new and rapidly changing global environment, policymakers "need to think about and prepare for the unthinkable", International Monetary Fund chief Kristalina Georgieva said at a symposium in Tokyo.

War in the Middle East could affect market sentiment, economic growth and inflation, creating new demands on leadership, she said. Countries should put domestic economic policies in order to have a sufficient "margin of safety" to respond to shocks, Georgieva emphasized.

08.23 CET: Gas prices in Europe jumped 30 percent on Monday, with disruptions to energy supplies from the Middle East raising fears of tougher competition for fuel and increasing inflationary pressures, Bloomberg writes. The European gas market is particularly vulnerable as the region's storage reserves are depleted after the winter. That means Europe will have to buy more LNG in the summer to replenish reserves, entering competition with buyers in Asia for limited supplies. "If you in Berlin want an extra tanker of U.S. gas, you need to offer a high enough price to poach it from Tokyo," Bernstein analysts wrote.

Benchmark European gas futures have risen 67% in the past week and are now trading at around €65 per MWh. During the 2022 energy crisis, gas prices were above €300.

08.11 CET: According to Bloomberg Intelligence analysts Alon Olshey and Grant Sporre, trading and mining giant Glencore is in the best position to generate trading profits from the premiums seen in coal and metals markets.

Rio Tinto and South32 could also benefit from a diversified commodity asset mix.

08.08 CET: Billionaire Leo Koguang bought a million shares of Nvidia, doubling his stake. "I hope I can calm the nervous market a bit. Good luck everyone," he wrote on social network X on Friday.

The deal is unusual for an investor - Koguang's fortune, which Bloomberg estimates at $13.4 billion, has for years been invested primarily in just one stock: Tesla. Since the beginning of the year, Tesla's stock is down nearly 12% and Nvidia's is down about 5%.

08.02 CET: Tokyo trading has ended, with the Nikkei 225 Tokyo Stock Exchange's main index falling 5.2% to its lowest level in more than a month. The broader Topix index was down 3.8%.

07.38 CET: Oil price gains are slowing amid news that the G7 countries will discuss an emergency release of stockpiles from strategic reserves. May Brent futures are now up less than 17% at $108.4.

Since the beginning of trading on Monday, oil traders have already sold almost 900,000 lots of Brent crude oil - this is more than 75% of the average trading volume for a full day over the past year, Bloomberg writes. The agency calls such volumes unprecedented.

Traders also broke a record last week, selling 18.6 billion barrels - enough for about six months of global consumption, Bloomberg notes.

07.25 CET: The risk of a sharp fall in US equities in the US before the end of the year has increased, according to renowned strategist Ed Yardeni. He has raised the probability of a market crash this year from 20% to 35%, Bloomberg reports, citing a recent note by the expert. At the same time, Yardeni has reduced from 20% to 5% the probability of an "explosive" rally, which is driven more by investor enthusiasm than by fundamental factors.

Yardeni has been right before in his predictions about market moves, Bloomberg notes. In December, the strategist recommended that investors reduce their exposure to the so-called Magnificent Seven tech stocks relative to the rest of the S&P 500 index.

07.10 CET: Gold prices were falling 2.5% to below $5050 per ounce in early trading, but have now trimmed the decline to 0.5%.

The precious metal is being pressured by "an inflationary monster that is strengthening the dollar," explained Hebe Chen, an analyst at Vantage Markets in Melbourne. "The $100 oil price has set off a chain reaction: energy shock, rising inflation expectations, strengthening dollar and weakening gold," she said.

Higher inflation fears in the U.S. make it more likely that the Fed will keep interest rates unchanged - or even raise them - for longer. And higher borrowing costs, like a stronger dollar, are generally negative for precious metals, which do not generate interest income. In addition, gold has become a source of liquidity amid an intensifying sell-off in global stock markets, Bloomberg notes.

06.55 CET: Currency markets are now guided by the principle: buy the dollar and nothing else, Bloomberg writes. The US currency is strengthening against all major competitors - even the currencies of oil-producing countries such as Norway. The krone fell 0.8% against the U.S. dollar.

"The dollar is seen as an absolute safe haven due to its liquidity while being bought back due to rising oil prices," said Ebury's head of market strategy Matthew Ryan. - "We expect the dollar to rise further while the war continues and its imminent end is not in sight.

06.45 CET: States may be forced to tap strategic oil reserves, warns Dutch banking group ING Groep. "Clearly, pressure in favor of such action will grow as supply tightens and oil prices hold above $100 a barrel," Warren Patterson, head of commodity markets strategy at the bank in Singapore, wrote, as quoted by Bloomberg. According to the analyst, "the market is forced to aggressively price in a prolonged supply disruption."

At least three G7 countries, including the U.S., support the use of strategic oil reserves, according to Financial Times sources. According to them, G7 finance ministers will discuss the idea later on Monday.

06.35 CET: Tokyo's key Nikkei 225 index is down 6%. The fear index on the Japanese trading floor has soared to its highest level since March 2020, when the COVID-19 pandemic began, Bloomberg writes.

Japan's economy is considered particularly vulnerable to rising oil prices because the country imports about 90% of its oil from the Middle East.

Previously, investors were optimistic about Japan for several reasons, from Prime Minister Sanae Takaichi's stimulus policy to support for corporate governance reforms. Between the beginning of the year and the Iranian crisis, the Nikkei index rose 16%, outperforming major global indices.

06.20 CET: A brief update on what's happening in the markets:

- Brent today is likely to set a record for a single-day rise in value, Reuters writes. The price of futures for benchmark crude jumped 29% to $119.5.

- Asia, which gets a significant portion of its energy supplies from the Middle East, has seen a panic sell-off. The region's main stock index, the MSCI AC Asia Pacific Index, collapsed by 5.6%, primarily due to falling stocks in South Korea and Japan.

- Futures on the main U.S. stock index, the S&P 500, were down 1.9 percent, while the Dow Jones and Nasdaq were down more than 2 percent.

- Gold fell more than 1 percent. In contrast, the Bloomberg Dollar Index rose 0.7 percent.

This article was AI-translated and verified by a human editor