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Today Fundamental Analysis: Oil Breaks Above $102 as Middle East Tensions Continue to Escalate
Oil prices pulled back slightly on Thursday, but Brent remained above $100 per barrel as escalating US-Iran tensions continued to raise concerns over Middle East energy supplies. Brent is trading around $100.55, while WTI is around $96.48. With attacks on shipping intensifying and the conflict entering its seventh month, further disruptions could push oil prices toward $120 per barrel, particularly if energy infrastructure or Strait of Hormuz transit is affected.
In the US, stock futures edged higher on Thursday as investors await the inflation data, with Dow futures up 0.3% after major indecis suffered a third consecutive day of losses. However, elevated Treasury yields and rising oil prices continued to pressure risk sentiment.
The 10-year Treasury yield climbed to 4.86%, its highest since November 2023, while Brent rose above $101 and WTI to $96 as US-Iran tensions intensified.
In Asia, TSMC reported record August revenue of $16.35 billion, up 53% year-on-year and 10% from July, as demand for AI-related chips remained exceptionally strong.
Gold recovered toward $4,400 on Thursday, ending a three-day losing streak as a weaker US dollar provided support. However, escalating US-Iran tensions around the Strait of Hormuz and rising oil prices are increasing inflation concerns and strengthening expectations for tighter Fed policy.
Markets are now focused on US PPI and CPI data for further clues on the Fed’s decision next week, with CME FedWatch pricing around a 60% probability of a rate hike. A stronger inflation reading could reinforce rate-hike expectations and weigh on gold, while softer data could support the metal through lower yields and a weaker dollar.
Gold buying by central banks has hit its highest rate since 2024.
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