Crude oil prices rallied sharply on Tuesday following reports that Iran attempted a surprise attack on US forces in the Persian Gulf.
The incident has immediately reignited fears of supply disruptions in one of the world's most critical energy chokepoints, sending risk sentiment tumbling across global markets.
Analysts at ING warned that the attempted strike has thrown "cold water on the idea of a swift de-escalation in the Persian Gulf.
Analysts at ING warned that the attempted strike has thrown "cold water on the idea of a swift de-escalation in the Persian Gulf." The broker's note, authored by Warren Patterson and Ewa Manthey, suggests that the geopolitical friction is likely to persist, keeping a premium on energy assets as traders price in the risk of further escalation.
The market reaction was broad-based, with energy commodities leading gains as investors sought safe havens amid the renewed tension.
Conversely, risk-sensitive sectors faced heavy selling pressure.
Chip stocks slumped further, extending a broader sell-off in artificial intelligence-related equities as the dual shock of geopolitical instability and tech sector weakness weighed on investor sentiment.