Oil price jumps as US-Iran clashes raise odds of interest rate rises
Summary
Oil and gas prices rose sharply after the US launched a third night of military strikes against Iran. This increase pushed expectations higher for interest rate rises by European banks due to fears of inflation.Key Facts
- Brent crude oil price rose by up to 4.6% to $87.08 per barrel, its highest in over a month.
- Oil prices had surged as much as 10% the day before, after President Trump announced a blockade of Iranian shipping.
- European natural gas prices increased nearly 3%, reaching their highest level since early April.
- UK natural gas prices rose 3.3%, marking a three-month high.
- Financial markets now expect the Bank of England and European Central Bank to raise interest rates by 0.25% in September and possibly again by the end of the year.
- President Trump said the Strait of Hormuz would remain open, with the US charging a 20% fee on ships passing through for security costs.
- The Strait of Hormuz is crucial as about 20% of the world’s oil supply passes through it, and recent tensions have slowed traffic significantly.
- UK government bond yields increased to their highest levels since May, while stock markets in Europe fell slightly amid the tensions.
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