Brent crude climbed back above $90 a barrel after a vessel transiting the Strait of Hormuz was struck by a projectile, deepening fears that the key oil corridor will stay shut. U.S. stock futures fell and gold slipped as traders weighed the escalation alongside rising Treasury yields.
Strait of Hormuz attack fuels oil jump
Brent crude futures traded 0.3% higher at $91.10 a barrel on Tuesday. U.S. West Texas Intermediate crude futures jumped 0.6% to $85.02 a barrel over the same stretch. The United Kingdom Maritime Trade Operations agency said a ship making an outbound transit of the Strait of Hormuz was struck by an unknown projectile on Tuesday, damaging its engine room and causing a crew casualty.
President Donald Trump said Washington would not seek an extension to the framework ceasefire deal signed with Tehran in June, which expired on Monday. He also suggested the U.S. had opened a back channel with officials from Iran's Islamic Revolutionary Guard Corps, a claim Iran refuted, and threatened to bomb Oman, which has been trying to broker its own deal with Tehran to reopen the strait. Commercial tanker traffic remains effectively stalled through the waterway, which carried roughly a fifth of the world's oil flow before the war broke out in late February.
Wall Street futures retreat after worst August session
Dow futures fell 49 points, or 0.1%, while S&P 500 futures declined 29 points, or 0.4%, and Nasdaq 100 futures slipped 209 points, or 0.7%. The drop followed a Monday session in which the S&P 500 posted its worst day of August so far. Climbing oil costs and the prolonged Middle East conflict weighed on sentiment.
According to Vital Knowledge: "The overall equity mood soured." Still, gains in chip stocks helped mitigate the downturn. Semiconductor names were buoyed by media reports on Anthropic's revenue and Nvidia's financial commitment to an Ohio data center coming in smaller than anticipated.
Gold slips as yields climb
Gold slipped back below $4,400 an ounce as higher Treasury yields and rising oil prices weighed on bullion. The 10-year U.S. Treasury yield extended its rise, increasing the opportunity cost of holding the non-yielding metal.
Bets on a possible Fed rate hike next month have edged up amid the Middle East tensions. However, markets have sharply reduced expectations for a September increase compared with a week ago, largely because of recent data showing unexpected job losses, softer-than-expected consumer inflation and weaker retail sales in July. Traders now await minutes from the Federal Reserve's July meeting for fresh clues on the rate outlook.
Source: Economy News (Investing.com)
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