Oil Price Surge Sparks Global Market Jitters

European markets were in decline on Wednesday as investors grew cautious ahead of key U.S. inflation data. The pan-European STOXX 600 index fell by 0.4% to 646.84 points, with Germany's DAX down 0.5%, London's FTSE 100 declining 0.2%, and France's CAC 40 slipping 0.6%. This cautious sentiment was fueled by renewed tensions in the Middle East, where Iran-backed Houthi forces launched strikes on several Saudi cities, drawing the US ally further into the conflict.

The attacks heightened concerns about disruptions to oil supplies and shipping routes, which could worsen global price pressures. Energy stocks were among the few gainers, rising nearly 1% as Brent crude prices traded close to $100 a barrel, a level last seen in late July. This sharp increase in oil prices has renewed concerns about inflation and could make it harder for central banks to ease monetary policy.

Investors are closely watching U.S. inflation data later this week, which may provide fresh clues about the Federal Reserve's policy outlook. Market participants are waiting to see whether price pressures are continuing to ease or remain persistent due to higher energy costs. In Europe, traders were positioning for the European Central Bank's upcoming policy decision, with markets expecting the ECB to raise interest rates on Thursday.