Brent breaks US$100 on Middle East flare-up, fanning inflation fears
Investors are growing increasingly anxious that the US Federal Reserve will have to hike interest rates to cap surging consumer prices as the war shows no sign of calming.
Oil prices soared above US$100 a barrel on Wednesday following a fresh escalation in the Middle East conflict, causing global stocks to falter. The surge in energy costs is fueling worries about inflation ahead of the US consumer price index release later in the week. With the US-Iran conflict now in its seventh month, investors are concerned that the Federal Reserve may need to raise interest rates to curb surging consumer prices.
Both sides in the conflict remain at a standstill: Iran maintains control over the Strait of Hormuz, while the United States pressures the Islamic republic's ports and economy. Iran recently struck a US military base in Jordan, retaliating for American attacks on its vessels in the strait. Meanwhile, Saudi Arabia and Iran-backed Houthis in Yemen exchanged attacks, targeting oil facilities in an offensive towards the Red Sea's Bab al-Mandab chokepoint.
Brent crude prices reached a peak of US$100.19, its highest since July, while West Texas Intermediate headed towards US$95 for the first time since June. The surging energy costs have kept inflation elevated worldwide, putting pressure on central banks to increase borrowing costs. The European Central Bank is expected to do so on Thursday.
Analysts warn that the Middle East conflict's impact on oil supply is causing concerns about the inflationary consequences of elevated oil prices.
Written by urgent.news from Free Malaysia Today's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
