Oil prices are climbing further this morning as investors grow fearful around the impact of the war in the Middle East on global supply.
Brent crude, the international benchmark for oil prices, is up 4.6% to $95.16 a barrel, its highest point in six weeks. Oil prices have risen by abut 20% this month as Washington and Tehran have exchanged fire.
Last night the US carried out its eleventh night of consecutive strikes against Iran, while the Iran-backed Houthi movement has threatened a naval blockade on Saudi Arabian ports.
Kathleen Brooks, of the broker XTB, notes the sharp rise today comes after Donald Trump said he was not interested in holding talks with Iran last night.
The rise in the oil price comes after President Trump played down the prospect of fresh talks with Iran. He also said that he would escalate tensions even further and will hit Iran’s Pickaxe Mountain, which contains an underground nuclear site.
…Reports suggest that US allies in the Gulf are getting tired of US strikes on Iran due to their ineffectiveness, however, there is no immediate solution to break the impasse. Should there be a wider war to bring Iran to its knees, or should the two sides commit to fresh peace talks? Markets would likely prefer fresh peace talks, especially now that the crisis is impacting global oil flows beyond the Strait of Hormuz. There are signs that tankers are avoiding or slowing down their approach to Bab El-Mandeb Strait near Yemen, after the Houthis threatened attacks on cargo ships in alliance with Iran. For now the Red Sea remains operational, but global supply chains are increasingly coming under threat as escalations in the conflict heat up. This will keep upward pressure on global supply chains, and inflation risks are ramping up every day this conflict escalates.
