Stock futures fall as oil prices continue to climb

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Oil Prices Surge as Supply Outlook Dims

Oil prices soared while U.S. stock futures edged lower on Thursday, following a significant reduction in the International Energy Agency’s (IEA) oil supply growth projection for the year.

The IEA now anticipates global oil supply will expand by only 1.1 million barrels per day in 2024, a sharp drop from its earlier estimate of 2.4 million barrels per day. The agency attributed this revision to the ongoing conflict in the Middle East, describing it as the most severe supply interruption the global oil market has ever seen.

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Despite a historic release of strategic oil reserves announced on Wednesday, oil prices continued their upward momentum, with Brent crude futures nearing the $100 per barrel mark once again.

Escalating Tensions Threaten Energy Markets

Recent missile strikes by Iran throughout the Middle East have heightened fears of extended disruptions to energy supplies. Two foreign oil tankers were attacked in Iraqi waters, resulting in fires and oil spills, while a container ship was hit north of Dubai. Bahrain also reported a new attack on its oil infrastructure.

Concerns were further amplified by reports from Iran’s semi-official Fars News Agency, which suggested that Iran-backed groups might close a key crossing that regulates ship movement to the Suez Canal via the Red Sea.

Market Reactions

U.S. stock futures experienced a slight decline. The Dow Jones Industrial Average closed Wednesday at its lowest level since December 1. Major stock indices in Asia and Europe also registered losses.

The yield on the benchmark 10-year U.S. Treasury note remained above 4.2%, and the U.S. dollar strengthened further.

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