Crude Futures Top $90 as Middle East Conflict Sparks EM Risk-Off, UBS Flags AI Aid
Crude oil futures rose above $90 per barrel in the conflict’s third week, triggering risk-off reversals in emerging market equities. UBS cautions that sustained oil shocks without a quick resolution could force a long-term growth recalibration while robust AI investment limits further downside.
1. Conflict Drives Oil Prices
Crude futures climbed above $90 per barrel as intensifying hostilities in the Middle East raised supply concerns. This marked the third week of conflict and triggered volatility across energy markets.
2. Emerging Market Impact
The sudden oil surge prompted a decisive risk-off move in emerging equities, reversing recent gains. Valuations were already tight, amplifying downside pressure when oil crossed $90.
3. AI Investment as Buffer
High AI capital expenditures over the past 15 months remain the primary support for EM returns despite energy shocks. Continued tech CAPEX by major hyperscalers could limit further equity losses.
4. Outlook for Crude and EM
A swift resolution in the Middle East and stabilization of energy costs are critical for regaining market momentum. Without these, both crude and EM equities may face prolonged volatility and growth recalibration.