Shares steady as oil declines

Brent crude futures swung between gains and losses to trade 0.2% higher at $87.89 per barrel

Shares steadied on Wednesday following a brief retreat in oil prices, but ​markets remained anxious as contradictory signals from the U.S.-Israeli war on Iran left investors struggling to gauge its impact on global inflation and growth.

A ‌short-lived retreat in oil came after the Wall Street Journal reported that the International Energy Agency has proposed the largest release of oil reserves in its history to bring down crude prices, providing some relief to battered global stocks while currencies and bonds were little changed.

Brent crude futures swung between gains and losses to trade 0.2% higher at $87.89 per barrel.

This news on the strategic reserves being released is welcomed by the market, because then, in the case of a short conflict, there is enough ​oil to avoid any rationing or economic impact, said Frank Benzimra, head of Asia equity strategy and multi-asset strategist at Societe Generale.

But it’s going to remain uncertain. It’s ​very, very unpredictable, he said.

Still, global stocks found some reprieve, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 1.6%, while the Nikkei gained 2.1%.

Kospi added 3.2%.

EUROSTOXX 50 futures slid 0.3%.

Markets are on edge as the Middle East war threatens ​to freeze global energy trade and ignite a price shock.

Still, energy markets remain hostage to how long – and how ​intense – the war becomes.

Several major questions loom over the oil market’s trajectory. Chief among them is the timing of safe passage for vessels through the Strait of Hormuz, a critical ‌chokepoint for ⁠global oil supply, said Kerstin Hottner, Vontobel’s head of commodities.

She said: Another concern is the possibility of infrastructure damage. Even if major hostilities subside, the prospect of ongoing low-level Iranian drone attacks on energy infrastructure could prolong market instability into next year.