Oil Prices Hit $115 Amid Market Concerns Over Earnings and AI Spending

Oil prices reached five-month highs on Friday, with Brent North Sea crude rising above $115 a barrel. This increase comes as conflicts in the Middle East continue and concerns grow about the impact on global markets.

Danni Hewson, head of financial analysis at AJ Bell, noted that worries about high oil prices and the future of spending on artificial intelligence (AI) are affecting market stability. Speculation about potential renewed US-Israeli military actions after the upcoming US midterm elections is also contributing to rising oil prices.

As winter approaches in the northern hemisphere, the demand for energy is expected to increase, further pushing oil and gas prices up. The benchmark oil contract for December delivery peaked at $115.45.

In the stock market, major indices in the US fell at the start of trading, with the Dow Jones Industrial Average dropping by one percent. Hewson pointed out that the volatility in the oil market has made investors hesitant to buy stocks, which has traditionally helped prevent larger declines.

High oil prices also raise concerns about inflation and interest rates. If borrowing costs rise, it could hinder the rapid growth of AI technologies that rely on loans. This week, shares of major tech companies like Meta and Lam Research fell despite reporting better-than-expected earnings.

In Europe, stock markets mostly declined, influenced by disappointing earnings from companies like Kering, which owns Gucci, and Volvo Cars. Kering’s shares dropped significantly after it failed to reassure investors about its performance, while Volvo Cars announced a loss and plans for job cuts in response to increased competition and tariffs.

Looking ahead, investors will focus on upcoming interest rate meetings from the US Federal Reserve and the European Central Bank, as well as new data on US economic growth.