Oil prices climbed to their highest level since May after the U.S. military destroyed five Iranian tankers, and a hotter August producer price report pushed the odds of a Federal Reserve rate increase next week to 64%.
Brent crude traded at $106.83 a barrel on Thursday afternoon, up 5.6% on the day and its highest level since May 19. The contract has risen 11.7% since Sept. 2, when it settled at $95.63.
Five Tankers Struck In The Gulf
U.S. Central Command said its forces destroyed five Iranian crude oil carriers on Sept. 8, after the Islamic Revolutionary Guard Corps targeted a U.S. Navy warship with ballistic missiles twice over the previous two days. The release names the M/T Kaviz, M/T Charminar, M/T Horizon 1, M/T Riesco and M/T Derya, placing four of the strikes in the Gulf of Oman and one near Kharg Island; it does not mention the Strait of Hormuz. A separate release describes three earlier tanker strikes on Sept. 5.
Meanwhile, the U.S. Maritime Administration published advisory 2026-011 on Sept. 9, warning that Iran continues to threaten and conduct strikes on commercial vessels in the Persian Gulf, Strait of Hormuz and Gulf of Oman. The advisory replaced one that expired the same day, making it a scheduled six-month renewal rather than a response to the week's strikes. The Energy Information Administration's most recent weekly report, covering the week ending Aug. 28, recorded commercial crude inventories down 4.5 million barrels to 424.5 million — a figure that predates both sets of strikes.
Inflation Data Pushes Fed Odds Higher
The Bureau of Labor Statistics reported that the producer price index for final demand rose 0.4% in August, against 0.1% in July. Core prices, excluding foods, energy and trade services, rose 0.3% on the month and 4.7% over the year. Traders raised the odds of a September rate increase to 63.5% by early afternoon, up from 52.5% at 8 a.m., with Brent's rise sitting underneath both the inflation print and the yield move.
Bond yields moved with it: the 10-year Treasury yield reached 4.92% on Thursday, its highest since Oct. 25, 2023, while the 30-year climbed to 5.34%, above every daily close of the past five years. The European Central Bank's Governing Council also acted Thursday, raising its three key rates by 25 basis points and taking its deposit facility to 2.50% — a rate hike that took effect Sept. 16.
Source: The Defiant
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