Oil price climbs above $90 as Iran says US diplomacy ‘isn’t possible’

Oil prices have risen above $90 per barrel following the US launching military strikes against Iranian missile launchers near the Strait of Hormuz. Brent crude, the global benchmark for oil prices, surged towards $91 per barrel after the first exchange of fire in over a month. Iran's Foreign Minister Abbas Araghchi dismissed any chance of diplomacy being restored, insisting that "pressure doesn't work."

Senior market analyst Achilleas Georgolopoulos at Trading Point stated that fresh military actions were driving up oil prices, though he noted the rally lacked the momentum required to surpass previous highs seen during the conflict. The conflict continues to disrupt shipping in the Strait of Hormuz, with vessels avoiding the area due to potential dangers.

Goldman Sachs forecasts that Middle Eastern crude and oil product exports have increased to 15-16 million barrels per day, still 8 million barrels short of pre-conflict levels but significantly higher than the 5-6 million barrels flowing in March during the peak of the conflict. High energy prices are fueling inflation concerns, and Federal Reserve Chair Kevin Warsh indicated that the central bank is prepared to act if inflationary pressures increase.

Meanwhile, the UK's inflation rate jumped to 2.9% in July, primarily due to rising oil and gas prices following the reset of the energy price cap. The cap is set to reach a three-year high, increasing the default tariff for British households by £60 per year, or £5 per month. This escalation puts pressure on Prime Minister Andrew Burnham, who aims to provide relief to families grappling with the cost of living crisis.