Oil soars above $100 as Middle East fears grow

Oil prices surged past $100 a barrel on Thursday as Iran-backed Houthi rebels targeted Red Sea shipping and threats by US President Donald Trump to strike them in return sent equity markets slumping.

The international benchmark Brent North Sea oil contract soared more than six percent over the symbolic $100 level, as the attacks potentially opened a new front in the Middle East war and Trump threatened the Houthis with "major military punishment".

Iran, meanwhile, vowed to continue striking the Gulf region so long as it remains under attack from US strikes.

Saudi Arabia had been using the Red Sea to export millions of barrels of oil that normally flowed through the Strait of Hormuz, so closing that shipping channel would remove more oil from the market.

"Investors are in a wary mood... as fresh jitters about the ongoing energy crunch hit sentiment," said Susannah Streeter, chief investment strategist at Wealth Club.

"With both the Strait of Hormuz and the Red Sea now under increasing pressure, markets are bracing for the possibility that the conflict could disrupt key energy routes (and) keep oil prices elevated," she added.

The prospect of higher oil prices also raises the prospect of higher inflation and interest-rate hikes, adding to weak sentiment, analysts said.

Crude Surge Shakes Markets

Brent North Sea Crude: UP 7.2 percent at $100.83 per barrel

West Texas Intermediate: UP 6.3 percent at $92.31 a barrel

New York - Dow: DOWN 1.2 percent at 51,590.90 points

New York - S&P 500: DOWN 1.6 percent at 7,382.73

New York - Nasdaq Composite: DOWN 2.8 percent at 24,981.43

London - FTSE 100: DOWN 0.7 percent at 10,639.17 (close)

Paris - CAC 40: DOWN 1.6 percent at 8,299.09 (close)

Frankfurt - DAX: DOWN 1.6 percent at 24,763.12 (close)

Tokyo - Nikkei 225: UP 0.5 percent at 66,422.60 (close)