Oil surged toward $100 a barrel on Thursday after Yemen's Houthi militants claimed strikes on two Saudi Arabian tankers in the Red Sea. The move lifted U.S. crude to a six-week high and revived worries about inflation and the Federal Reserve's next move.
Crude prices climbed close to $100 a barrel on Thursday after Yemen's Houthi militants claimed attacks on two Saudi Arabian tankers in the Red Sea.
West Texas Intermediate's September contract advanced almost 4% to $89.97 a barrel. Brent crude's front-month contract rose more than 4% to $98.20 a barrel, hitting prices not seen in two months. The U.S. benchmark, meanwhile, reached its highest level in six weeks.
The rally builds on a longer climb. Economists at Handselbanken led by James Sproule described Brent's gain of about 30% since the U.S. and Iran resumed fighting as "a rise that looks set to continue" if the two carry on with strikes.
What triggered the strikes
Yahya Saree, the Houthis' military spokesperson, said missile and drone strikes had been launched against the vessels, which he claimed had violated the group's blockade. The Houthis had earlier declared a maritime embargo on Saudi Arabia amid the war in Iran.
U.S. Central Command then said it would carry out a 12th night of strikes against Iran, targeting missile and drone storage sites, coastal surveillance facilities and air-defense assets. The latest strikes left investors unsure when shipping through the Strait of Hormuz might return to normal, with talks between Washington and Tehran no longer appearing imminent.
Inflation and the Fed back in focus
Higher energy costs have rekindled inflation concerns. Economist Peter Schiff warned that oil's rebound above $100 could reverse June's 0.4% monthly CPI decline and drive a sharp U.S. inflation rebound in July.
That pressure has complicated the outlook for the Fed's July 28–29 meeting. Futures traders assigned a 37.9% chance of a quarter-point rate hike as of July 23, up sharply from around 10% on July 14. With July inflation data not due until Aug. 12, policymakers will decide before seeing the full effect of oil's surge.
Sources: MarketWatch, crypto.news
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