World shares were mixed on Wednesday following losses on Wall Street, while oil prices gained more than 3 percent due to uncertainties over when the war in Iran will end. The futures for the S&P 500 and the Dow Jones Industrial Average edged less than 0.1 percent higher.
Federal Reserve Meeting
The Federal Reserve was expected to keep its key interest rate unchanged at 3.6 percent as it wraps up a policy meeting later Wednesday. Most policymakers believe that at this level, the rate can still cool inflation by slowing borrowing and spending, but not so much that it will drag down hiring or raise unemployment.
European Markets
In early European trading, Britain's FTSE 100 slipped 0.6 percent to 10,269.06. Germany's DAX traded 0.3 percent lower at 23,958.39, while France's CAC 40 dropped 0.6 percent to 8,054.38.
Asian Markets
Markets in Japan were closed for a holiday. Elsewhere in Asia, South Korea's Kospi rose 0.8 percent to 6,690.90, and the Hang Seng in Hong Kong gained 1.7 percent to 26,111.84. The Shanghai Composite index rose 0.7 percent to 4,107.51. Australia's S&P/ASX 200 slipped 0.3 percent to 8,687. Taiwan's Taiex lost 0.6 percent, and India's Sensex gained 0.9 percent.
Oil Prices Surge
The price of a barrel of Brent crude oil to be delivered in June rose 3.1 percent to $114.70 early on Wednesday. Brent to be delivered in July was also up 3 percent, at $107.61. Brent oil was trading around $70 per barrel before the war began in late February. Benchmark US crude gained 3.4 percent to $103.32 a barrel.
UAE Leaving OPEC
The UAE's announcement Tuesday that it was leaving the Organization of the Petroleum Exporting Countries as of Friday was being closely watched by oil markets. OPEC accounts for roughly 40 percent of global oil output, and the UAE is one of its largest oil producers. The UAE has resisted OPEC production quotas in recent years, wanting to sell more oil to the rest of the world. Initially, oil prices fell on expectations that supply will rise.
“The UAE's exit will increase (oil) output,” ING Bank strategists Warren Patterson and Ewa Manthey wrote in a research note on Wednesday. “The UAE has been increasingly frustrated over recent years by its output being constrained by OPEC production quotas, which have kept it well below its potential.”
Strait of Hormuz Blockade
As US-Iran negotiations for a permanent end to the Iran war remain stalled, the Strait of Hormuz, where roughly one fifth of the world's oil passed through before the war, was still largely closed. Short-term impacts on oil prices still depend mainly on prospects for reopening the waterway, analysts said.
