Brent crude pushed above $100 a barrel and held there overnight after the largest wave of US-Iran attacks on shipping since the conflict began deepened supply concerns. Flows through the Strait of Hormuz remain far below pre-war levels, and pressure on Red Sea routes is rising, with President Trump signaling no quick end to the conflict.
Brent rose above USD 100/bbl yesterday and held above that level overnight, as the largest wave of US-Iran attacks on shipping since the war began intensified supply concerns. Oil flows through the Strait of Hormuz remain far below pre-war levels, and pressure on Red Sea routes is rising.
Shipping routes under mounting pressure
The attacks mark an escalation in a conflict that has already squeezed tanker traffic through one of the world's most important oil chokepoints. Hormuz flows stay depressed while Red Sea routes come under increasing strain.
President Trump said the conflict may not end until after the midterms, while the WSJ reported that top White House advisers see a risk it could last through the end of his term. Both signals point to limited prospects for near-term de-escalation.
Rate decisions add to the market backdrop
The oil move comes as investors also weigh a wave of central-bank rate hike decisions. The ECB is expected to raise policy rates by 25bp today, taking the deposit rate to 2.50%, in line with consensus and market pricing, with Lagarde expected to retain full optionality and avoid firm guidance on the path ahead.
Higher energy prices, rising bond yields and a disappointing Treasury buyback announcement weighed on sentiment on Wednesday. The S&P 500 fell 0.5%, while the Stoxx 600 dropped 1.4%. Bond markets moved too, as EUR swaps rose around 8bp higher across the 2Y to 10Y segments of the curve on the back of the stronger energy prices.
Market breadth stayed weak even as some pockets of equities held up better than others, underscoring that yesterday's sector performance looked more consistent with a stagflationary shift than outright growth concerns.
Source: ActionForex
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