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Oil Surges, Stocks Slide as Conflict Grips Middle East

FILE PHOTO: Oil tankers pass through the Strait of Hormuz, December 21, 2018. REUTERS/Hamad I Mohammed/File Photo
FILE PHOTO: Oil tankers pass through the Strait of Hormuz, December 21, 2018. REUTERS/Hamad I Mohammed/File Photo
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Oil Surges, Stocks Slide as Conflict Grips Middle East

FILE PHOTO: Oil tankers pass through the Strait of Hormuz, December 21, 2018. REUTERS/Hamad I Mohammed/File Photo
FILE PHOTO: Oil tankers pass through the Strait of Hormuz, December 21, 2018. REUTERS/Hamad I Mohammed/File Photo

Oil prices surged on Monday and shares slid as military conflict in the Middle East looked set to last weeks, threatening to upend a global economic recovery and perhaps reignite inflation.

Brent jumped 6.4% to $77.57 a barrel, though it had briefly topped $82.00 at one stage, while US crude climbed 6.2% to $71.17 per barrel. Safe-haven gold rose 1.6% to $5,360 an ounce.

Military strikes by the United States and Israel on Iran showed no sign of lessening, while Iran responded with missile barrages across the region, risking dragging its neighbors into the conflict, reported Reuters.

President Donald Trump suggested to the Daily Mail the conflict could last for four more weeks, while posting that attacks would continue until US objectives were met.

All eyes were on the Strait of Hormuz where around a fifth of the world's seaborne oil trade flows and 20% of its ‌liquefied natural gas. While ‌the vital waterway has not yet been blocked, marine tracking sites showed tankers piling ‌up ⁠on either side ⁠of the strait wary of attack or maybe unable to get insurance for the voyage.

"The most immediate and tangible development affecting oil markets is the effective halt of traffic through the Strait of Hormuz, preventing 15 million barrels per day (bpd) of crude oil from reaching markets," said Jorge Leon, head of geopolitical analysis at Rystad Energy.

"Unless de-escalation signals emerge swiftly, we expect a significant upward repricing of oil."

A prolonged spike in oil prices would risk reigniting inflationary pressures globally, while also acting as a tax on business and consumers that could dampen demand.

OPEC+ did agree a modest oil output boost of 206,000 barrels per day for April on Sunday, ⁠but a lot of that product still has to get out of the Middle ‌East by tanker.

"The nearest historical analogue in our view is the Middle East ‌oil embargo of the 1970s, which increased oil prices by 300% to around $12/bbl in 1974," said Alan Gelder, SVP of refining, chemicals ‌and oil markets at Wood Mackenzie.

"That is only US$90/bbl in 2026 terms. Eclipsing this in today's market concerned about ‌significant losses of supply seems very achievable."

That would be expensive for Japan, which imports all its oil, sending the Nikkei down 1.3%, with airlines among the hardest hit.

Chinese blue-chips were off just 0.1%, though the country does get much of its seaborne oil imports from the Middle East. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.2%.

AND IT'S A BIG US DATA WEEK

In the Middle East, the ‌UAE and Kuwait temporarily closed their stock markets citing "exceptional circumstances".

For Europe, EUROSTOXX 50 futures shed 1.3% and DAX futures slid 1.4%. FTSE futures fell 0.6%.

On Wall Street, S&P 500 ⁠futures and Nasdaq futures both ⁠lost 0.8%.

The oil shock rippled through currency markets with the dollar a main beneficiary. The US is a net energy exporter and Treasuries are still considered a liquid haven in times of stress, shoving the euro down 0.2% to $1.1787.

While the Japanese yen is often a safe harbor, the country imports all of its oil making the flows more two-way. The dollar added 0.3% to 156.44 yen. 

In bond markets, 10-year Treasury yields steadied at 3.970%, having briefly touched an 11-month low of 3.926%. 

Bonds had gained a bid on Friday when UK mortgage lender MFS was placed into administration following allegations of financial irregularities. Its collapse stoked wider credit fears, with well-known big banks among its lenders. MFS had borrowed 2 billion pounds ($2.69 billion). 

The news slugged banking stocks and combined with jitters over AI-related stocks to hit Wall Street more broadly. 

Investors also have to weather a squall of US economic data this week, including the ISM survey of manufacturing, retail sales and the always vital payrolls report. 

Any weakness could shake confidence in the economy after a disappointing fourth quarter, but would also likely narrow the odds on rate cuts from the Federal Reserve. 

Markets currently imply a 50% chance of an easing in June and about 58 basis points of cuts this year. 

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Business

Tech Hit by New AI Worries on Positive Day for Most Markets

Hong Kong stocks rallied more than three percent on a broadly healthy day for Asian markets. Leung Man Hei / AFP
Hong Kong stocks rallied more than three percent on a broadly healthy day for Asian markets. Leung Man Hei / AFP
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Tech Hit by New AI Worries on Positive Day for Most Markets

Hong Kong stocks rallied more than three percent on a broadly healthy day for Asian markets. Leung Man Hei / AFP
Hong Kong stocks rallied more than three percent on a broadly healthy day for Asian markets. Leung Man Hei / AFP

Tech firms tumbled Thursday as investors contemplated the outlook for the AI boom after Democrats swept the US midterms, partly on the back of growing anger over the rapid building of data centers across the country.

However, broader markets mostly rallied and oil plunged after Donald Trump's Republicans were dealt a historic defeat that was blamed on high prices, tariffs and the Iran war.

The result stoked hopes he will look to wind down the Middle East conflict, which would help temper inflation and even soften his stance on trade.

But AI-linked firms came under the cosh amid fears for planned data center construction projects as well as renewed scrutiny from newly installed Democrats on Capitol Hill.

The sector had already been in the crosshairs of investors owing to questions about the vast sums pumped into new facilities, R&D and chip development, and when any companies would see a profit.

Charu Chanana at Saxo Markets said the vote was accelerating a reassessment of AI that was already under way.

"A Democratic Congress introduces another layer of uncertainty: regulatory scrutiny," she wrote, adding that the three main risks were more oversight, data center restrictions and capital spending uncertainty.

"The congressional scrutiny could accelerate demands for AI safety standards, independent model evaluations and greater accountability for data center developers," she added.

However, she also said: "This is not the same as an outright anti-AI policy agenda. AI is strategically important for US competitiveness, particularly against China, and there remains considerable bipartisan interest in maintaining American leadership."

Chip firms were hammered in Asia, with South Korea's SK hynix off more than seven percent and Samsung 5.5 percent down.

Tokyo-listed Kioxia dived more than 13 percent and Advantest tanked 14.7 percent, while Tokyo Electron lost more than nine percent and SoftBank 6.8 percent.

US Nasdaq futures fell more than one percent.

Broader markets performed better as investors rotated into other sectors including finance, auto, mining and manufacturing names.

Seoul, the poster child of the AI-led surge in the first half of the year, shed more than five percent, while Taipei lost more than three percent. Tokyo gave up 1.8 percent.

But there were healthy gains in Hong Kong, helped by hopes for an easing of trade tensions between the US and China, with tech titans including Alibaba, JD.com and Tencent leading the way amid a shift into beaten-down regional stocks.

Shanghai, Sydney, Singapore, Wellington, Mumbai, Jakarta and Manila also advanced.

Oil continued to fall after diving more than eight percent Wednesday on the US result amid optimism Trump will seek a deal to end the Iran war, which has been a key driver of the inflation spike that has hammered US consumers.

Hopes were given a boost when Vice President JD Vance said in a social media post that the Republican defeat was due to the unpopularity of the eight-month-old conflict.

The drop in crude prices -- both main contracts are now below $100 for the first time since the start of October -- has also tempered inflation worries and, in turn, Treasury yields, which dipped again Thursday.

The lower cost of borrowing has also been helped by the prospect that gridlock on Capitol Hill would lead to less spending.

That also weighed on the dollar, which held losses against its peers in Asian trade.

Business

Türkiye Showcases Renewables Surge, but Leaves Coal Intact

Türkiye is rapidly expanding its renewable energy capacity. But as host of COP31, the country faces growing pressure to match its clean energy ambitions with a clear commitment to phase out fossil fuels. Yasin AKGUL / AFP
Türkiye is rapidly expanding its renewable energy capacity. But as host of COP31, the country faces growing pressure to match its clean energy ambitions with a clear commitment to phase out fossil fuels. Yasin AKGUL / AFP
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Türkiye Showcases Renewables Surge, but Leaves Coal Intact

Türkiye is rapidly expanding its renewable energy capacity. But as host of COP31, the country faces growing pressure to match its clean energy ambitions with a clear commitment to phase out fossil fuels. Yasin AKGUL / AFP
Türkiye is rapidly expanding its renewable energy capacity. But as host of COP31, the country faces growing pressure to match its clean energy ambitions with a clear commitment to phase out fossil fuels. Yasin AKGUL / AFP

On a windy hillside about an hour's drive northwest of Istanbul, the Catalca power plant was one of Türkiye's first large-scale wind farms and has been feeding electricity into the grid for 18 years.

With an installed capacity of 93 megawatts, it generates 287 million kilowatt-hours of electricity a year, enough for around 115,000 households, said AFP.

"By replacing electricity that would otherwise come from fossil fuel-fired power plants, this output avoids 185,936 tons of carbon emissions each year," operator Sanko Enerji says.

Nearly two decades on, Catalca is one of nearly 300 wind farms, its giant turbines a symbol of the rapidly expanding capacity for renewable energy in Türkiye which is hosting the COP31 UN climate summit that opens in Antalya on Monday.

Last year, 43 percent of Türkiye's electricity came from clean energy sources, of which wind and solar accounted for 22 percent, according to energy think tank Ember.

With electrification emerging as one of the central themes of COP31, Türkiye has been pushing hard for it to be an implementation-focused summit that turns existing climate pledges into action.

Energy Minister Alparslan Bayraktar has outlined plans to triple Türkiye's installed solar and wind capacity from around 40 gigawatts to 120 gigawatts by 2035.

But with coal still the leading source of power generation, Türkiye is under pressure to pair its impressive renewables growth with a definitive shift away from fossil fuels.

Not only is it still building coal-fired power plants, it has yet to set a date to phase out fossil fuels.

- Coal still dominant -

"Türkiye's continued reliance on coal, alongside plans for further expansion, highlights the contradiction at the heart of its current trajectory," Duygu Kutluay of Beyond Fossil Fuels told AFP.

Embracing an electrification agenda alone did not amount to a genuine energy transition because "coal remains the country's largest source of electricity generation", she said.

Coal-fired power plants accounted for 33.5 percent of Türkiye's electricity production in 2025, energy ministry figures show, with Ember saying almost two-thirds of its coal was imported.

Plans to expand coal capacity "risk locking in further fossil-fuel dependence", she warned.

"As Türkiye increases renewable capacity, it must ensure clean electricity replaces fossil-fuel generation rather than simply meeting additional demand," Kutluay said.

The challenge is not only expanding renewables but establishing "a clear pathway to phase out coal".

Asked about Türkiye's continuing reliance on coal, Bayraktar told AFP in February that Ankara prioritized securing affordable energy supplies and reducing dependence on imports.

"Coal can initially be replaced with gas, but in the medium and long term it can be substituted with nuclear," he said.

Ibrahim Erden, president of the Turkish Wind Energy Association, said every country's transition was different with "no single path that suits everyone".

- Need for investment -

Emin Emrah Danis, chief executive of MOBEN consultancy, said Türkiye's energy policy was shaped by rising electricity demand and the need for "baseload" generation to deliver constant power around the clock.

"This is why Türkiye has invested heavily in gas- and coal-fired power plants over the past 30 years," he told AFP.

"For coal's share of power generation to fall to meaningful levels, Türkiye needs substantial investment in electricity storage and nuclear power," he said, referring to battery storage for renewable power.

Türkiye is currently putting the finishing touches on the first reactor of its Akkuyu nuclear power plant, which should be online by the start of 2027, Bayraktar told an energy summit last week.

But Türkiye's nuclear expansion, with two more plants in the pipeline, was unlikely to add enough baseload capacity to replace coal-fired electricity generation before around 2040, Danis said.

And coal would likely remain part of the energy mix for decades, with the need for baseload power and dependence on imports making a full phase-out infeasible before "the mid-2050s".

Türkiye relies heavily on imports of oil, natural gas and coal from countries like Russia, Iran and Azerbaijan.

Erden said infrastructure updates were essential to give greater place to renewables.

"We cannot simply shut down coal-fired power plants today and rely solely on wind and solar energy ... The technological and physical infrastructure is not yet capable of supporting that."

Beyond the climate argument, geopolitical tensions have also strengthened the case for domestic renewables.

"Renewables ... are not only one of the most effective tools for tackling climate change, but also an important means of strengthening energy security and reducing dependence on foreign supplies," he said.

Business

Saudi Arabia Offers 100% Social Insurance Debt Waiver to Businesses That Have Exited Market

Officials from the General Organization for Social Insurance at an earlier meeting with businessmen and businesswomen at the Riyadh Chamber (SPA)
Officials from the General Organization for Social Insurance at an earlier meeting with businessmen and businesswomen at the Riyadh Chamber (SPA)
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Saudi Arabia Offers 100% Social Insurance Debt Waiver to Businesses That Have Exited Market

Officials from the General Organization for Social Insurance at an earlier meeting with businessmen and businesswomen at the Riyadh Chamber (SPA)
Officials from the General Organization for Social Insurance at an earlier meeting with businessmen and businesswomen at the Riyadh Chamber (SPA)

Saudi Arabia's General Organization for Social Insurance (GOSI) has made businesses that have ceased operations and exited the Saudi market eligible for a 100% waiver of outstanding social insurance debts, subject to approved conditions, Asharq Al-Awsat has learned.

The move aims to address accumulated financial obligations, help businesses settle their accounts and close outstanding cases, and support stability in the Kingdom's private sector while resolving financial difficulties faced by companies that have left the market.

The measure is part of a broader package of improvements GOSI is implementing to enhance services for employers and businesses, in response to feedback and suggestions gathered during direct meetings with officials and business owners, in cooperation with chambers of commerce.

Taking Economic Conditions into Account

The initiative has economic and regulatory implications beyond debt relief, seeking to address financial and administrative liabilities left behind by businesses that have exited the market and facilitate the formal closure of their records in accordance with regulations.

Its main significance lies in striking a balance between protecting the rights of the social insurance system and its contributors, on the one hand, and taking into account the economic circumstances of businesses that have ceased operations, on the other.

It also reinforces regulatory flexibility in the business environment, ensuring that accumulated obligations do not become a permanent obstacle to the settlement of financial and administrative affairs.

Enhancing Market Attractiveness

The initiative reflects a more flexible approach to dealing with business distress, focusing on resolving outstanding liabilities rather than allowing them to remain a continuing burden on business owners.

This approach is expected to strengthen confidence in regulatory procedures and enhance the attractiveness of Saudi Arabia's business environment.

The move is particularly significant given the changing nature of the business sector, with new companies entering the market each year while others cease operations because of competition, rising costs, or shifting market conditions.

Settling the social insurance accounts of businesses that have exited the market could ease the administrative and financial burden on their owners, help them reorganize their financial affairs and potentially pave the way for a return to commercial activity in the future, without old liabilities remaining an obstacle, subject to applicable regulations.

According to information obtained by Asharq Al-Awsat, GOSI has notified all companies and establishments of improvements introduced to its business services, including the debt waiver.

The measure is designed to enable businesses that have ceased operations to resolve their outstanding social insurance obligations and complete the regulatory procedures associated with closing their operations, easing the financial burden on owners whose businesses are no longer active.

Service Improvements

In a related development, GOSI's improvements include upgrades to services for registering businesses, terminating their activities and managing ownership records, alongside efforts to resolve recurring technical problems and improve the quality of digital services.

The changes are intended to improve the user experience and accelerate transaction processing.

GOSI has also expanded electronic payment options through its GOSI Business app, allowing employers to pay amounts exceeding 30,000 Saudi riyals ($8,000) in multiple installments.

The measure aims to make it easier for businesses to meet their financial obligations while providing greater payment flexibility.

The updates also include measures to increase transparency in transaction processing by clarifying the reasons for rejecting occupational injury claims and contributor-related transactions.

Notifications have also been introduced through the GOSI Business and Tawakkalna apps to inform users when applications are received, accepted, returned, or rejected.

Together, the improvements reflect GOSI's efforts to modernize its digital services, simplify procedures for employers and improve the management of social insurance obligations.

The measures are also intended to support the business environment and help resolve outstanding financial and administrative matters involving businesses.