Volatility in the oil market has continued to climb as the conflict involving the United States, Israel, and Iran has spread across the Middle East. Showing no signs of abating after two weeks, the conflict has plunged global energy markets and shipping into chaos.
Tehran stated that the world should prepare for crude prices of $200 per barrel, as its military targeted merchant vessels on Wednesday. Maritime traffic through the Strait of Hormuz has dropped to record lows, triggering a surge of more than 10% in Brent crude futures.
The International Energy Agency (IEA) recommended the release of 400 million barrels of oil on Wednesday--the largest such measure in its history--but the move failed to reassure markets.
"An improvement in market tone is unlikely today barring a shift in the Middle East. With few relevant economic data points, the geopolitical front will continue to set the pace," Bankinter analysts said on their Telegram channel.
Central banks in the United States, the eurozone, the UK, Switzerland, Sweden, Canada, and Japan are scheduled to hold monetary policy meetings next week. However, according to Bankinter, the Federal Reserve is likely to wait for March data--following the impact of the war with Iran--before making any decisions.
"Furthermore, considering there is a change of guard in June with the arrival of (Kevin) Warsh," they added, referring to Donald Trump's nominee to lead the Fed.
On the macroeconomic front, investors will be watching weekly unemployment figures and the January trade balance in the United States, due at 1230 GMT.
Nevertheless, the primary focus will be on Friday's release of the delayed January Personal Consumption Expenditures (PCE) index in the US, which the Federal Reserve typically uses as its preferred inflation gauge.
At 0819 GMT on Thursday, Spain's benchmark IBEX 35 was down 105.60 points, or 0.61%, at 17,246.30 points, while the FTSE Eurofirst 300 index of leading European shares retreated 0.50%.
In the banking sector, Santander lost 1.36%, BBVA fell 1.46%, Caixabank shed 0.68%, Sabadell dropped 1.70%, Bankinter declined 0.73%, and Unicaja Banco lost 1.16%.
Among large non-financial stocks, Telefónica gained 0.65%, Inditex shed 0.83%, Iberdrola rose 0.08%, Cellnex fell 0.21%, and the oil company Repsol climbed 0.97%.
(Reporting by Benjamín Mejías Valencia; editing by Jorge Ollero Castela)
