Oil prices rallied this week following news of a tanker attack in the Middle East as investors considered the size of an expected Federal Reserve interest rate cut later this month.
Wall Street stocks were in positive territory for most of Friday but fell after Iran’s Revolutionary Guards announced they had confiscated a British tanker in the strategic Strait of Hormuz.
Oil prices then quickly rallied on the latest escalation of tensions in Iran, lifting petroleum-linked equities in the United States.
Brent North Sea crude finished up 0.9% at $62.47 per barrel while West Texas Intermediate closed 0.6% higher at $55.63 per barrel.
“Perhaps this will be the action that forces all parties to de-escalate the situation and come to the negotiating table,” BMO Capital Markets stated in a note.
In New York, the broad-based S&P 500 lost 0.6%, while the Dow ended down 0.3%, lifted in part by Boeing. The aerospace giant saw its share price surge 4.5% despite announcing US$6.6 billion in new costs tied to the worldwide grounding of the 737 MAX aircraft.
Analysts said while costs were higher than expected, Boeing reassured investors in some respects, including its decision not to further cut production of the plane.
Earlier, European markets finished mixed.
US stocks rallied earlier in the week following remarks from New York Federal Reserve Bank President John Williams. He said central banks should “act quickly” and not shy from a “dramatic series of rate cuts” to address economic weakness.
The comments were interpreted as endorsing an interest rate cut later this month, possibly a larger 50-basis point cut.
But the New York Fed clarified that the speech concerned decades of research and was not about what the central bank may decide at its next policy meeting July 30-31.