The Ibex 35 falls 2% and Brent crude surges above $100 a barrel

BarcelonaThe Spanish stock market opened sharply lower on Monday, falling 3.17%. Affected by the surge in Brent crude oil prices, it dropped below the psychological threshold of 17,000 points, reaching 16,533.4 points at 9:00 AM. It recovered somewhat, but by mid-morning was down 2%. This all followed a new wave of attacks in the Middle East, which has caused commodity prices such as oil and gas to soar. Brent crude, the European benchmark, began the day with a 16% increase, trading at $107 a barrel, its highest level since July 2022.

The Ibex-35, Spain's main stock index, opened at these levels after closing last Friday with a 7.01% loss, its worst weekly performance in the last four years. Year-to-date losses now stand at 4.35%. In the early stages of trading, the biggest decliners on the Ibex-35 were Acerinox (-6.18%), Merlin Properties (-4.71%), Sacyr (-4%), and Fluidra (-3.77%). Conversely, the only companies that advanced were Indra, CaixaBank, and Endesa, all with gains of less than 1%. The main European stock exchanges also opened lower, although they later recovered to -1.89% in Paris, -1.71% in Frankfurt, -1.95% in Milan, and -1.49% in London. Likewise, major Asian stock markets closed lower on Monday, with the Nikkei index in Tokyo falling sharply by 5.2%. In the currency market, the euro traded at 1.1558 against the dollar. greenbacksMeanwhile, the yield on the Spanish 10-year bond has risen to 3.416%.

Gas and oil continue to rise

In this climate of uncertainty, with the ongoing blockade of the Strait of Hormuz, through which approximately 25% of the world's oil and 20% of its gas flows, crude oil prices continue to surge after accumulating a jump of over 30% last week. The price of Brent crude rose 17% around 9:10 a.m. this morning, reaching $108.30 – although the increase later slowed to 13.1%. During the early hours, it reached a high of $119.50. Meanwhile, West Texas Intermediate (WTI), the US benchmark, climbed 13.5% to $103.20.

Likewise, the price of gas on the Dutch futures market, the European benchmark, climbed more than 15% in early trading on Monday, reaching €61.40 per megawatt-hour, although it rose by almost 30% at the opening bell.

The G7 puts strategic oil reserves on the table

The world's seven richest countries are considering tapping into their strategic oil reserves in response to soaring prices. Sources within the French government, which holds the G7 presidency this year, confirmed this possibility just hours before a meeting of finance ministers on Monday to address the economic fallout from the conflict. Members of the International Energy Agency (IEA), including the G7, are required to maintain strategic oil reserves equivalent to 90 days of consumption to cope with exceptional circumstances. The IEA stated on Monday that it is closely monitoring the situation in the Middle East, "including the potential repercussions of any disruption to energy flows across the Strait of Hormuz." The IMF warns: "Think the unthinkable and prepare."

The International Monetary Fund (IMF) has recommended that all countries prepare for the unthinkable in the context of the new crisis hitting the global economy due to the conflict in the Middle East, whose impact it expects to analyze in more detail in its upcoming macroeconomic outlook, to be published in mid-April.

"My advice to policymakers around the world in this new global environment: think about the unthinkable and prepare," warned IMF Managing Director Kristalina Georgieva on Monday during a conference in Tokyo. In this regard, the Bulgarian economist urged countries to focus "on what they can control" and advocated for them to invest in strong institutions to underpin robust economies and private sector-driven growth, as well as being agile.

As a general rule, Georgieva noted that every 10% increase in oil prices, if sustained for most of the year, will translate into a 40 basis point increase in global overall inflation. Furthermore, this rise in the price of barrels could also lead to a 0.1% to 0.2% drop in global GDP growth.