Crude oil jumps 6% as Iran strikes ships, ignites Emirati port, squeezes Hormuz flows Brent settles at $114.44 a barrel; WTI climbs to $106.42 amid sharp rally; global equities fall on energy shocks
Brent settles at $114.44 a barrel; WTI climbs to $106.42 amid sharp rally; global equities fall on energy shocks
Escalation follows US pledge to force the shipping route open.
Central banks turn more hawkish as energy clouds the rate-cut outlook.
Sustained oil above $100 fuels renewed inflation concerns across economies.
Oil prices surged 6% on Monday while global stocks declined after Iran intensified its military campaign, targeting several vessels in the Strait of Hormuz and setting a UAE oil port on fire.
Brent crude climbed $6.27, or 5.8%, to settle at $114.44 per barrel, while West Texas Intermediate rose $4.48, or 4.4%, to close at $106.42.
The moves came after a weekend pledge by President Donald Trump that the US Navy would keep the strait open, marking the biggest escalation since a ceasefire was declared four weeks ago.
The Strait of Hormuz, which carries about one-fifth of the world’s seaborne oil and gas, has faced severe disruption over the past two months.
Stocks declined across the board. The Dow Jones Industrial Average fell 1.13%, the S&P 500 dropped 0.41%, and the Nasdaq Composite slipped 0.19%.
“The longer oil prices remain above $100 a barrel, the more the fiscal stimulus from the 2025 tax cuts shifts from being a boost to acting as a shock absorber,” said Brock Weimer, investment strategy analyst at Edward Jones.
Global equities also edged lower, with a broad index of shares outside Japan down 0.22%.
In Europe, markets were pressured by German automakers after Trump said he would increase tariffs on European cars and trucks. The pan-European STOXX 600 index fell 0.99%, while Germany’s 10-year bond yield rose 5 basis points to 3.08%. Markets in London were closed for a public holiday.
Central banks turn hawkish as oil drives inflation worries
Rising oil prices pushed bond yields higher and clouded the outlook for global monetary policy.
Markets no longer expect the Federal Reserve to cut interest rates this year and are starting to price in potential rate hikes from the European Central Bank and the Bank of England.
Barclays joined other brokerages in predicting no policy easing by the Fed this year. Friday’s April payrolls report could further influence expectations.
The yield on benchmark 10-year US Treasury notes rose 6 basis points to 4.438%.
Yen volatility unsettles currency markets
Currency markets remained volatile, with traders closely monitoring signs of Japanese intervention to support the yen.
The dollar initially dropped sharply against the yen in Asian trading before rebounding. The yen was last down 0.04% at 157.12 per dollar.
Analysts estimate Tokyo may have intervened last week with around $35 billion.
“The case for intervention is strong, given the inflationary impact of a weaker yen through import prices, a US administration broadly comfortable with such action, and Japan’s ample foreign exchange reserves,” said Roberto Cobo Garcia, head of G10 FX strategy at BBVA.
The euro fell 0.24% to $1.1692, while sterling weakened 0.29% to $1.3532. The dollar index rose 0.28% to 98.44.
In commodities, spot gold declined 2.13% to $4,515.27 per ounce.
About the Author
