Australian share market: Oil price gains and tanker attacks drive ASX200 back deep in the red

Investor nerves over just how long the US-Israeli war with Iran will last coupled with growing fears over global oil supply drove the Australian share market back deep into the red.

After two days of gains that came close to clawing back Monday’s near $100 billion bloodbath, the S&P/ASX200 closed Thursday down 1.3 per cent to 8629 points, erasing about $47b of value from the country’s biggest listed companies.

The fall came as investors digested overnight news of further attacks on oil tankers passing through the Strait of Hormuz and Irani drones hitting an apartment block and the international airport in Dubai.

An emergency decision by the International Energy Agency’s to release 400 million barrels of oil from its strategic reserves failed to allay fears at home that Australia’s supplies were also at risk.

It was also revealed that Australia’s top fuel suppliers have halted spot sales as supply tightens amid the disruptions.

The Australian Institute of Petroleum members — that together supply about 85 per cent of the nation’s liquid fuels — will prioritise their regular customers and cease spot sales.

Average prices at the bowser have soared 20 per cent in the past month, with some service stations selling a litre of unleaded for more than $2.40.

Donald Trump’s comments that the war was done — which came with a warning that the US would not “leave early” — pushed oil prices higher for a second day, with West Texas Intermediate climbing as much as 6.6 per cent to $US93.01 a barrel after adding almost 5 per cent on Wednesday.

Global benchmark Brent crude jumped back above $US100 a barrel.

Iran told regional intermediaries that any ceasefire would require the US to guarantee that neither it nor Israel would strike the country in the future. Washington is unlikely to accept those terms, further dimming already fading expectations that the war will end soon.

Miners were among the biggest drags on the market, tanking 1.8 per cent, along with IT stocks (down 3.8 per cent), the banks (down 1.7 per cent), real estate (down 2.5 per cent) and consumer discretionary stocks (down 1.4 per cent).

The energy sector was the only bright spot, gaining 2.2 per cent as oil prices continued their rollercoaster ride.

Among the resources heavyweights, BHP shed 1.9 per cent, Rio Tinto 1.4 per cent and Fortescue 1.5 per cent. Gold miners also sold off as the precious metal eased 0.5 per cent to $US5152 ($7213) an ounce.

PLS fell 2.5 per cent while fellow lithium miner Liontown reversed early losses to close down just 0.6 per cent as it posted another interim loss but promised shareholders that surging revenue and production was paving a path to profitability.

Lynas Rare Earths was a lone success story in the sector, soaring 2.8 per cent to five-month highs after locking in a favourable supply contract extension with a Japanese buyer.

Woodside and Santos posted modest gains, while coal producers surged and uranium stocks fell our of favour.

Plunging confidence hit the heavyweight financials sector, which dived as NAB and ANZ led the big four banks lower.

Economists at all big four banks are tipping back-to-back hikes in March and May (with the RBA not meeting in April), which would make it three hikes in as many meetings in 2026.

Block out the noise

Schroders’ head of Australian equities Martin Conlon said geopolitical uncertainty, commodity price fluctuations and structural changes in market participation are contributing to heightened volatility.

But investors needed to ignore the noise and stay focused on durable businesses and rational valuations.

“There are a number of factors creating uncertainty for investors right now, including geopolitical tensions and movements in oil and commodity prices,” he said.

“Panic is never a good sentiment for investment. If investors are thinking about the sustainable earnings of a company and whether they are paying a sensible price for it, they should generally be OK. The key is to remain rational and focus on fundamentals.”