Crude oil prices surged Thursday, with Brent jumping 6% overnight to a four-year high of USD 122.53 a barrel. This happened as fears over constrained Iranian oil flows hit global markets.
The rally followed concerns that US President Donald Trump could tighten or prolong a months-long blockade affecting Iranian oil shipments.
Investors also focused on the Strait of Hormuz, where prolonged disruption could deepen energy market volatility.
The oil spike pushed global bond yields higher as investors reassessed interest-rate expectations in a more inflationary environment.
Markets have largely priced out Federal Reserve rate cuts this year. Now, they see a roughly even chance of a rate increase by next spring.
The shift followed one of the Federal Reserve’s most divided decisions since 1992. This occurred after three policymakers opposed the central bank’s easing bias, and one backed a rate cut.
The central bank also acknowledged that rising global energy prices were feeding inflation risks. Investors are watching the European Central Bank and Bank of England for hawkish signals.
Asian equities were mixed, though technology and artificial intelligence-linked shares found support from strong corporate earnings.
Jose Torres, a senior economist at Interactive Brokers, said stock market bulls hope that artificial intelligence’s strength can offset cyclical weakness.
Read: US Near Net Crude Exporter as Iran War Disrupts Oil Flows
The US dollar strengthened alongside higher yields. Meanwhile, the Japanese yen weakened amid rising oil prices and geopolitical tensions, driving volatility in currency and bond markets.
