Oil Prices Surge Amid Escalation of US-Iran Tensions

Global Markets Tilt Amid Rising Tensions in the Middle East

Oil prices surged and US stock futures slipped in early trade on Friday, following a month-long Middle East ceasefire in doubt after the United States and Iran exchanged fire. US crude futures jumped more than 2% from Thursday's close to $96.8 a barrel, marking a lower week for the commodity.

The escalation in tensions between the two nations had a ripple effect on global markets, with S&P 500 futures slipping about 0.2% and Nikkei futures indicating a slightly lower open for Japanese shares. The Japanese shares had soared to record highs on Thursday.

The incident occurred while Washington awaited Iran's response to a US proposal that would halt fighting but leave contentious issues, such as Iran's nuclear program, unresolved for now. The US military claimed it acted in self-defense after Iran attacked Navy destroyers passing through the Strait of Hormuz. However, the US military stated that Iran did not hit any US assets in the attack.

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In foreign exchange markets, the rising tension lifted the dollar off its recent lows, setting it on course to finish the week mostly steady. The yen, however, has struggled to strengthen past 155 to the dollar, despite data suggesting that authorities in Tokyo may have sold as much as $67 billion in defense of the currency this week and last. The yen last traded at 156.88 per dollar, and the euro at $1.1726.

Investors are now focused on the US non-farm payrolls report on Friday, with jobs expected to have increased in April by 62,000 after rebounding 178,000 in March, according to a Reuters survey of economists. US Treasury Secretary Scott Bessent is due to visit Tokyo next week, and markets will be on high alert for any comments he might make on the yen or Japan's monetary policy, given his past remarks in favor of speedier Japanese rate hikes.