Brent crude climbed to $106.83 a barrel on Thursday, up 5.6% on the day after the U.S. destroyed five Iranian oil tankers this week. The rally landed alongside a producer price report that pushed traders' odds of a Federal Reserve rate hike next week to 64%.
Brent crude touched $106.83 a barrel on Thursday afternoon, its highest level since May 19. The contract has now risen 11.7% since Sept. 2, when it settled at $95.63.
Five Tankers Destroyed
U.S. Central Command said its forces destroyed five Iranian crude oil carriers on Sept. 8, after Iran's Revolutionary Guard targeted a U.S. Navy warship with ballistic missiles twice over the past two days. The strikes hit the M/T Kaviz, M/T Charminar, M/T Horizon 1, M/T Riesco and M/T Derya, with four vessels struck in the Gulf of Oman and one near Kharg Island; crews were told to abandon ship first. A separate Sept. 5 release describes three earlier tanker strikes.
The U.S. Maritime Administration renewed its Persian Gulf advisory on Sept. 9, warning that Iran continues to threaten commercial shipping in the Strait of Hormuz and the Gulf of Oman. The advisory replaced one that expired the same day, making it a scheduled six-month renewal rather than a direct response to this week's strikes. The Energy Information Administration's weekly petroleum report, delayed a day by the Sept. 7 holiday, was due at noon Thursday; its prior report showed commercial crude inventories down 4.5 million barrels to 424.5 million for the week ending Aug. 28, before either round of strikes.
Inflation Data Lifts Hike Odds
The oil rally landed the same morning the Bureau of Labor Statistics reported producer prices rose 0.4% in August, against 0.1% in July, with final demand prices up 5.4% over 12 months. Traders responded by pushing the odds of a September rate hike from 52.5% at 8 a.m. ET to 63.5% by early afternoon on prediction markets. Bond yields moved with it — the 10-year Treasury yield reached 4.92%, its highest since Oct. 25, 2023, and the 30-year hit 5.34%, above every daily close of the past five years.
Equities and gold fell alongside the rate hike repricing. The S&P 500 slipped 0.4% and the Nasdaq Composite 0.3%, while gold dropped 1.3% to $4,405 an ounce. According to Thadeu Dos Santos, regional director at brokerage Infinox: "the figures reinforced concerns that inflation remains persistent" given elevated oil prices and a resilient labor market.
Source: The Defiant
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