Oil prices climb as US-Iran uncertainty outweighs Saudi pipeline restart
OIL prices climbed on Tuesday as uncertainty over US-Iran negotiations continued to outweigh the resumption of Saudi crude flows through its East-West pipeline, while the ringgit weakened against the US dollar. Brent crude rose towards US$106 a barre...
Brent crude prices surged past US$106 per barrel on Tuesday, driven by uncertainty surrounding US-Iran negotiations and the reopening of the Strait of Hormuz. This overshadowed the resumption of Saudi crude flows via its East-West pipeline. The US dollar index climbed above 101.2 as investors weighed the impact of higher oil prices on inflation and US monetary policy.
Iranian officials expressed doubt about reaching a Middle East peace agreement before the November US midterm elections, while recent talks in New York yielded minimal progress. US President Donald Trump rejected Iran's latest proposal to reopen the strategic waterway, though discussions about potential sanctions relief for Iran have sparked debate.
If meaningful progress is made toward a nuclear agreement, the prospect of sanctions relief and unfreezing funds for Iran has been suggested. Saudi Arabia reportedly restarted oil flows at approximately 3.5 million barrels per day following repairs to its East-West pipeline, serving as an alternative export route bypassing the Strait of Hormuz.
The market's sensitivity to the strategic waterway's situation persists, given the significant portion of global oil supplies that typically pass through it. The oil price increase bolstered the US dollar as investors evaluated the potential inflationary effects and the likelihood of tighter US monetary policy. Several Federal Reserve officials recently argued that further rate increases may be necessary due to resilient economic growth and a robust labor market.
Additionally, Cleveland Fed President Beth Hammack highlighted concerns over government debt contributing to higher long-term US Treasury yields. Investors now await the Federal Reserve's preferred inflation gauge and key US employment data for further insights into the monetary policy outlook. The US Dollar Index stood at 101.224 on Tuesday, up 0.25% from the prior session.
It has gained 1.81% over the last four weeks and 3.39% over the past 12 months. The US dollar was quoted at RM4.0850 against the Malaysian ringgit on Tuesday, marking a 0.08% increase from the previous session. The ringgit has weakened by 1.48% against the US dollar over the past month but remains 2.93% stronger compared to the past 12 months.
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