Oil prices were lower on Thursday as the conflict in the Middle East threatened to expand.
On Thursday, the United States and Iran resumed strikes and Egypt confirmed that an unidentified drone was responsible for an attack on two ships in a port on the Mediterranean Sea the day before.
Separately, bond yields remained elevated after a Federal Reserve meeting on Wednesday left investors questioning whether the central bank was committed to keeping inflation contained.
Oil prices seesaw.
-
The price of Brent crude, the global benchmark for oil, fell about 1 percent to $90 a barrel on Thursday, a day after jumping nearly 8 percent.
-
West Texas Intermediate crude, the U.S. benchmark, was down about the same amount to between $83 and $84 a barrel.
-
Investors and analysts are focused on the continued disruption to shipping in the Strait of Hormuz, the narrow waterway between Iran and Oman that is a vital trading route for oil and natural gas that normally carries as much as one-fifth of the world’s oil supply. In addition, the market is closely watching efforts by the Iranian-backed Houthi militia in Yemen to restrict traffic in the Bab al-Mandab Strait at the southern end of the Red Sea, which Saudi Arabia has used as an alternative to the Strait of Hormuz.
Bond investors are on alert.
-
U.S. government borrowing costs stayed elevated on Thursday as investors seemed concerned about whether the Federal Reserve would be fully committed to bringing inflation down to its target.
-
The yield on 30-year Treasuries held at 5.22 percent after jumping to a near two-decade high on Wednesday after the Fed held interest rates steady for a fifth consecutive meeting. Three Fed policymakers dissented from the decision, voting to raise rates.
-
The yield on 10-year Treasury notes rose to 4.69 percent, the highest since January 2025.
-
The reluctance of Fed Chairman, Kevin Warsh, “to send a clear policy signal also made the messaging somewhat muddled at times,” Ellie Henderson, an economist at Investec, wrote in an analyst note. Short-term yields fell as traders reduced bets of rate hikes this year, but long-dated bonds rose.
-
The Bank of England held interest rates steady on Thursday as policymakers warned that inflation was likely to re-accelerate later this year because of the rise in energy prices. “The impact of the energy shock on the U.K. economy remains uncertain,” the bank said in a statement. Three out of the nine members who make up the rate-setting committee voted to increase rates.
Stocks are higher.
-
Futures on the S&P 500 were higher, pointing to an increase when stocks resume trading in the United States on Thursday.
-
Stocks in Asia were mixed. Indexes in South Korea and Taiwan, both heavily exposed to recent volatility in semiconductor stocks, closed lower. The Nikkei 225 in Japan rose 0.7 percent.
-
In Europe, the Stoxx 600, a broad-index that tracks the region’s largest companies, rose about 0.7 percent.
Gasoline prices tick higher.
-
Gas prices rose one cent on Thursday to a national average of $4.10 a gallon, according to the AAA motor club. The increase has raised the cost for drivers by 37 percent since the war began.
-
Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
-
The average price of diesel also ticked up one cent to $5.34 on Thursday, up 42 percent since the start of the war.
The post Oil Prices Wobble as Middle East Veers Toward Wider Conflict appeared first on New York Times.
