Key facts
- Brent crude rose 3.8% to $104 a barrel on Thursday.
- A report cited unnamed officials suggesting potential US strikes against Iran before midterm elections.
- A tanker was hit by projectiles off Qatar on Wednesday.
- Shell and Chevron are shutting down production in the Gulf of Mexico due to Hurricane Isaias.
- Maersk is increasing its emergency fuel surcharge.
Oil prices surged on Thursday, with Brent crude climbing 3.8% to $104 a barrel, driven by escalating Middle East tensions and concerns over production disruptions from a hurricane in the Gulf of Mexico. The rise in energy prices fueled fears of inflation and reinforced expectations of further interest rate hikes by central banks.
A report in The Atlantic, citing unnamed officials from the Trump administration, suggested the White House has asked the Pentagon to prepare options for strikes against Iran. This has weakened hopes of de-escalation before the US midterm elections, with potential for further action after the polls. Increased attacks on tankers in the Strait of Hormuz, including an incident off Qatar on Wednesday that caused casualties, have heightened supply concerns.
Simultaneously, Hurricane Isaias prompted Shell and Chevron to halt production in the Gulf of Mexico. Adding to worries about energy prices, shipping group Maersk announced an increase in its emergency fuel surcharge.
The confluence of these factors triggered a sell-off in global financial markets. The 10-year yield on French debt rose 6 basis points to 4.931%, nearing a 24-year high. German 10-year yields increased by 2 basis points to 3.504%, and US 10-year Treasury yields climbed 5 basis points to 5.331%. Global stocks also declined, with Japan's Nikkei down 1.4%, South Korea's Kospi down 2.6%, the Stoxx Europe 600 down 1%, and the UK's FTSE 100 down 0.6%.