Markets face the 'risk triangle': Hormuz, oil, and debt
Oil prices continued their rise for the fifth consecutive session, driven by investor concerns over ongoing energy supply disruptions in the Middle East, coinciding with growing anxiety about the United States’ financial situation after the total US debt surpassed the $40 trillion mark for the first time in history. Futures contracts for Brent crude oil for October delivery rose by approximately $1.45, or 1.58%, to $93.07 per barrel, while US West Texas Intermediate (WTI) crude for September delivery climbed $1.40, or 1.63%, to $87.23 per barrel, marking a fifth consecutive session of gains for both benchmarks.
Investors are closely monitoring developments in the conflict between the United States and Iran and its implications for shipping routes and crude oil supplies, particularly as flows through the Strait of Hormuz remain below pre-conflict levels. The strait previously transported approximately one-fifth of global oil consumption.
Conversely, data from the US Energy Information Administration showed that crude oil inventories rose by 4.4 million barrels during the week ending August 14, contrary to expectations of a 600,000-barrel decline. Meanwhile, distillate product inventories, including diesel and heating oil, fell for the third consecutive week.
$40 Trillion: A Historic US Debt Milestone
In a development further fueling investor concerns, total US public debt exceeded $40 trillion, according to the latest data from the US Department of the Treasury, reaching approximately $40.047 trillion. This figure includes $32.266 trillion in debt held by the public and $7.782 trillion in intragovernmental holdings. US debt has more than doubled in less than a decade, rising from $19.95 trillion in January 2017. This trajectory is raising growing concerns about the rising cost of servicing the debt, especially as the gap between spending and revenues continues to widen.
Observers note that reaching such record debt levels is not merely a financial figure but has become a factor influencing investor decisions, given the pressure rising interest burdens place on the US budget and the potential repercussions for interest rates, bonds, the dollar, and capital flows.
Kuwait Stock Exchange: Stability Amid Mixed Performance
Locally, the Kuwait Stock Exchange closed the week’s trading with mixed results. The general market index fell by 3.02 points, or 0.03%, to 8,818.26 points, amid active trading volume of 346.3 million shares across 25,780 cash transactions valued at 94.6 million dinars.
In contrast, the main market index rose by 20.02 points, or 0.22%, to 8,988.42 points, driven by the trading of 193.4 million shares valued at 39.9 million dinars across 13,184 transactions. The first market index declined by 8.08 points, or 0.09%, to 9,239.72 points, with 152.9 million shares traded in 12,596 transactions valued at 54.7 million dinars.
Market movements reflect ongoing liquidity reallocation and selectivity among stocks, as investors remain cautious, awaiting global developments, foremost among them oil prices, the trajectory of geopolitical tensions, interest rate trends, and the impact of rising US debt levels on global markets.
