Oil prices climb as fresh strikes target infrastructure
Prices rebounded from the previous day's sharp losses, which came after the head of the International Energy Agency said more stockpiles could be tapped if needed.
Equity markets mostly gained after US chip titan Nvidia said it expected to make at least $1 trillion in revenue through the end of 2027 and several airlines reported better-than-expected revenue in the first quarter, taking some attention away from conflict in the Middle East.
The three main US indices opened higher in New York while most major European bourses were also in the green in mid-afternoon trading.
Delta Airlines and American Airline were up almost five percent.
Stock markets have shown "resiliance", said David Morrison, Senior Market Analyst at Trade Nation, but "there was undoubtedly a cautious tone as investors weighed geopolitical risks and shifting monetary policy expectations."
Earlier in Asia, Hong Kong, Seoul and Taipei closed higher, though Tokyo and Shanghai dipped.
Investors are awaiting a slew of central bank decisions this week, with expectations that interest rates will remain unchanged as elevated energy prices threaten to drive up inflation, even if the labour market appears to be softening in the United States.
The caution ahead of the key bank meetings left currency markets in a holding pattern, with the dollar little changed against most of its peers.
The US Federal Reserve "is in a bind," said eToro US investment analyst Bret Kenwell. "Slower growth and a softer labor market would normally argue for easing monetary policy. But inflation remains sticky, while surging oil prices add another layer of uncertainty to the outlook."
Australia's central bank hiked its key interest rate Tuesday, pointing to "sharply higher fuel prices".
International benchmark Brent North Sea crude and the main US oil contract West Texas Intermediate were both up around two percent.
"The longer the oil price stays above $100 per barrel, the louder the alarm bells for the market over inflation risks," said Dan Coatsworth, head of markets at AJ Bell.
A new drone strike on Tuesday hit the Fujairah oil complex, which sits on the Gulf of Oman and enables the UAE to bypass the Strait of Hormuz for some exports.
Two drones targeted a major southern Iraqi oil field, an oil ministry spokesperson told AFP, after the second attack in four days.
Meanwhile, Israel said it had killed Iran's national security chief as it launched a "wide-scale wave of strikes" in Tehran, alongside attacks on Hezbollah in Beirut.
"The next stage of the Iran-US war has seen both sides step up attacks on energy infrastructure," said Kathleen Brooks, research director at trading group XTB.
She added that concerns are "shifting from a shipping crisis caused by the closure of the Strait of Hormuz to an oil supply crisis, where energy infrastructure across the Gulf is a target."
Trump has called for allies in Europe and elsewhere to help reopen the Strait of Hormuz saying at the weekend that securing the waterway "should have always been a team effort, and now it will be".
However, the response has been lukewarm, with German Chancellor Friedrich Merz saying the war started by US-Israeli strikes on Iran was "not a matter for NATO", while Britain, Spain, Poland, Greece and Sweden all distanced themselves from the calls.
Australia and Japan also opted not to join.
Key figures at around 1340 GMT
West Texas Intermediate: UP 1.7 percent at $95.08 per barrel
Brent North Sea Crude: UP 2.0 percent at $102.16 per barrel
New York - Dow: UP 0.9 percent at 46,946.41 points
New York - S&P 500: UP 0.7 percent at 6,742.97
New York - Nasdaq Composite: UP 0.7 percent at 22,517.17
London - FTSE 100: UP 0.9 percent at 10,411.62
Paris - CAC 40: UP 1.0 percent at 8,015.22
Frankfurt - DAX: UP 0.8 percent at 23,742.52
Tokyo - Nikkei 225: DOWN 0.1 percent at 53,700.39 (close)
Hong Kong - Hang Seng Index: UP 0.1 percent at 25,868.54 (close)
Shanghai - Composite: DOWN 0.9 percent at 4,049.91 (close)
Euro/dollar: UP at $1.1538 from $1.1510 on Monday
Pound/dollar: UP at $1.3347 from $1.3327
Dollar/yen: DOWN at 158.88 yen from 159.14 yen
Euro/pound: DOWN at 86.43 pence from 86.36 pence