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Brent jumps and gas surges amid US strikes and Iran shipping blockade
Brent rose as much as 4.6% to $87.08 a barrel, while European natural gas climbed nearly 3% to €52.8 per megawatt hour, boosting expectations for September rate hikes from the Bank of England and ECB.
Oil prices jumped after renewed US action against Iran raised concerns about tighter supply from Iranian shipping routes. Brent crude rose as much as 4.6% to $87.08 a barrel on Tuesday, after gaining as much as 10% on Monday when a blockade of Iranian shipping was announced, according to the Guardian Economics. The report said gas prices also surged, with the Dutch natural gas contract for August delivery up nearly 3% to €52.8 per megawatt hour, the highest since early April.
The move in energy prices fed into expectations for higher inflation and therefore higher interest rates in Europe. For the first time in a month, markets priced in a quarter-point Bank of England rate rise by September, with a likely second quarter-point move by the end of the year, the report said.
Traders also forecast ECB action, including a quarter-point increase in September and another by the end of December, after earlier pricing had reflected smaller odds during a fragile ceasefire earlier in the month. The report tied the shift to US strikes and policy signals affecting transit risk, noting that markets are reacting to fears of further upward pressure on oil.
The Guardian Economics also reported that US President Donald Trump said the Strait of Hormuz would remain open “with or without Iran,” while the US would begin charging fees for ships transiting the waterway, including a stated 20% fee “for any and all costs necessary” to provide security and safety for vessels. It said the policy reversal has heightened concerns that oil could continue to rise and contribute to higher inflation.
Latest closeWTI crude $78.04 ▲9.3%|Brent $83.15 ▲9.4%|Nat gas $2.893 ▼1.6%