Brent crude surges past $105 as tanker attacks escalate in Gulf
Oil prices rose about 4% with Brent crude hitting $105 a barrel after a spike in attacks on shipping in the Middle East. The surge has increased the likelihood of a US interest rate hike, according to analysts. The conflict between the US and Iran has resumed, raising concerns about further supply disruptions.
The latest price spike follows a series of maritime confrontations, including Iran's reported strikes on ten vessels near the Strait of Hormuz and the Houthi takeover of Yemen's Mocha port. These events have intensified worries about Gulf shipping lanes, pushing Brent up over 30% from its early August trough as the US-Iran ceasefire failed to hold.
Analysts point to China's crude buying patterns as a pivotal variable for sustaining the rally. Recent increases in Chinese imports could magnify supply shortfalls, whereas a slowdown might cap further gains. Meanwhile, US retail gasoline has climbed to roughly $4.28 a gallon, and traders now see a near 70% chance of a Federal Reserve rate hike next week.
Sustained high energy costs could squeeze household budgets across the US and Europe, as fuel expenses translate into pricier goods and services. This inflationary pressure may prompt central banks to keep interest rates elevated, potentially slowing economic growth and affecting borrowing costs for consumers and businesses. Additionally, prolonged instability in the Gulf could disrupt global supply chains, leaving import-dependent nations vulnerable to further price shocks and geopolitical uncertainty.