Oil Surge and Market Reaction
On Wednesday, crude futures advanced by over 1%, with Brent peaking at $99.67 per barrel, approaching the $100 threshold not seen since July. Meanwhile, West Texas Intermediate neared $95 for the first time since June. This surge occurred as the US-Iran standoff entered its seventh month without signs of easing, despite Washington's assertions of a near-term agreement.[S1]
Tehran declared it had attacked a US base in Jordan, following American strikes on its ships in the Strait of Hormuz, which were responses to missile launches at a US vessel. Additionally, Iran threatened to strike oil tankers near Kuwait and Bahrain, advising crews to abandon their vessels, as reported by IRNA.[S1]
Inflation and Central Bank Pressure
The surge in energy costs has kept inflation elevated globally, putting pressure on central banks to hike borrowing costs. The European Central Bank is expected to do so on Thursday. All focus is on the US consumer price index due Friday, seen as key to whether the Federal Reserve lifts rates next week.[S1]
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Market analyst Fawad Razaqzada at FOREX.com said the continuing conflict keeps concerns over supply disruptions alive, worrying investors about inflationary consequences. He noted that for the Fed, resilient US employment and renewed energy price pressure are both hawkish signals, and a sustained rise in oil prices could reverse progress on inflation.[S1]
Global Markets and Currency Moves
The prospect of higher borrowing costs weighed on equities, with all three main Wall Street indexes dropping. Asian markets fluctuated, with Seoul leading gains as chipmakers rallied, while Hong Kong, Sydney, and others edged down. The yen strengthened to around 153.50 per dollar after Tuesday's rally pared.[S1]
