Oil prices top US$91 as renewed US-Iran fighting raises global energy shock fears
BRENT crude climbed above US$91 a barrel on Tuesday as renewed fighting between the United States and Iran fuelled concerns over disruptions to Middle Eastern oil supplies, threatening to deepen pressure on global energy markets. US forces targeted t...
Oil prices surged past US$91 per barrel on Tuesday amid renewed tensions between the United States and Iran, raising concerns of potential supply disruptions in Middle Eastern oil markets. US forces attacked Iranian rocket launchers on Larak Island, while Iran retaliated by targeting the United Arab Emirates and Jordan. US President Donald Trump vowed further strikes, including on Kharg Island, a crucial oil export hub.
While oil shipments through the Strait of Hormuz persisted, the threat of attacks loomed large after a tanker fire in the strait due to striking naval mines. This incident highlighted the vulnerability of the vital route, which handles a substantial share of global oil supplies. Moreover, the impact of strikes on Russian refineries has further strained global refining capacity, leading to elevated refined-product margins.
The surge in oil prices also exerted pressure on currencies, particularly Japan's yen. Treasury Secretary Scott Bessent urged Japan's government and central bank to increase interest rates, expecting them to strengthen the currency. A joint US-Japanese intervention in July provided only temporary relief, as the yen has since lost most of its gains.
Markets forecast a 73% probability of a Bank of Japan rate hike later in the month, although analysts believe a single hike may not be sufficient to revive the currency's strength. A September rate increase by the BOJ remains the expectation, but a more hawkish approach may be necessary to sustainably move away from the 160 yen per dollar threshold.
The US dollar, meanwhile, weakened despite rising oil prices and Treasury yields, as investors weighed the possibility of a Federal Reserve rate hike later in the month. The dollar index dropped to around 99.37, signaling a potential decline of about 0.2% in August, marking the second consecutive monthly decline.
As energy markets brace for heightened volatility due to the heightened tensions, investors will closely monitor economic indicators such as the US jobs report in the coming week for indications on the Federal Reserve's next interest-rate decision.
Written by urgent.news from The Vibes's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
