Brent crude moved towards $100 a barrel on Wednesday, September 9, as an intensifying Middle East conflict unsettled Asian markets and revived fears that higher energy costs could prolong inflation.
Brent futures rose $1.57, or 1.6 per cent, to $99.49 a barrel in early trading, their highest level since late June. US West Texas Intermediate crude gained $1.60 to $94.63.
The latest rise followed a series of attacks across the region. Iranian-backed Houthi forces in Yemen struck four cities in southern Saudi Arabia on Tuesday, injuring 73 people and setting oil installations ablaze, according to reports cited by Reuters.
The US military said it had destroyed five Iranian crude oil tankers after Iran’s Revolutionary Guard targeted a US Navy vessel with ballistic missiles. Iranian state media later reported that Tehran had launched missiles at a US base near Al Azraq in Jordan, although there was no immediate confirmation from Jordanian or American authorities.
Asian stocks subdued as oil prices climb
Markets across Asia responded cautiously. Shares in Sydney fell about 0.3 per cent and Hong Kong’s Hang Seng index dropped 0.6 per cent, while mainland Chinese blue-chip stocks edged 0.2 per cent higher.
Some regional markets were supported by a rebound in technology shares. Japan’s Nikkei rose 0.6 per cent after falling 1.7 per cent in the previous session, while South Korea’s KOSPI gained 1.6 per cent and Taiwan’s TAIEX advanced 0.6 per cent.
The gains followed a 1.3 per cent rise in the Philadelphia semiconductor index overnight, although all three major US stock indexes closed lower on Tuesday. S&P 500 futures were little changed in early Asian trading.
Chris Weston, head of research at Pepperstone, said markets were showing “indecision” as investors weighed the conflict, oil prices and the outlook for interest rates. He described Brent crude as one of the clearest real-time measures of market sentiment and said the $100 level now appeared “highly achievable”.
Investors are also awaiting US consumer price data due on Friday, which could influence expectations for the Federal Reserve’s next decision. Markets were pricing roughly even chances of a quarter-point rate rise or a hold at next week’s meeting, while a quarter-point increase from the Bank of Japan was considered highly likely.
The yen strengthened 0.2 per cent to 153.66 against the dollar, moving back towards Tuesday’s nearly seven-month high as traders reduced short positions and anticipated faster Japanese rate rises. The euro also edged higher ahead of the European Central Bank’s policy decision, with inflationary pressures from the conflict fuelling expectations of a rate increase.
