UOB Global Economics & Markets Research highlights that escalating US-Iran tensions and Houthi attacks on Red Sea shipping have driven Brent crude above US$100 for the first time since May, with Asia trading near US$101. The bank notes the key near-term risk is further Middle East escalation and associated Oil price spikes, which are also feeding into higher Fed rate expectations and global yields.

Middle East conflict lifts crude sharply

"The US-Iran conflict continued to escalate on Thu (23 Jul) as US President Trump on Axios threatened a "massive attack" on Iran, and separately on his social media, said he will hold Iran responsible for any further attacks by the Yemen-based Houthis on Red Sea ships, potentially widening Washington’s involvement in a Middle East war that shows no sign of abating, sending Brent crude jumping more than 6% to US$100 a barrel, for the first time since May."

"This morning, Brent crude opened its Asia trade above US$100, and it is currently trading close to US$101.04, as of 7:15am SGT."

"The key risk for today still centers on a further escalation in the Middle East situation and its very direct impact on oil prices."

"Crude oil extended its gains on Thu, with Brent settling above US$100 for the first time since May, up 7% to settle at $100.69/bbl (+14.2% on the week) while WTI rose by 6.2% to end at $92.19/bbl (+12% on the week),after Iran-backed Houthi militants attacked two Saudi Arabian tankers in the Red Sea, opening a new front in the Middle East conflict and threatening supply disruptions through both the Strait of Hormuz and the Red Sea corridor."

"According to Bloomberg reports, some Asian oil buyers are said to be in talks with Saudi to potentially reroute flows around Africa after Houthi attacks on tankers in the waterway."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)