Brent crude climbed to $106.83 a barrel Thursday, its highest since May 19, after U.S. forces destroyed five Iranian oil tankers this week. WTI also extended a multi-day rally as China returned to the market, and the price surge coincided with a rise in Treasury yields and Fed rate-hike odds.
Brent crude traded at $106.83 a barrel on Thursday afternoon, up 5.6% on the day and its highest level since May 19. The contract has risen 11.7% since Sept. 2, when it settled at $95.63.
Tankers Struck In The Gulf
U.S. Central Command said its forces destroyed five Iranian crude oil carriers on Sept. 8, after Iran's Islamic Revolutionary Guard Corps targeted a U.S. Navy warship with ballistic missiles twice over the prior two days. The release places four of the strikes in the Gulf of Oman and one near Kharg Island but does not mention the Strait of Hormuz. The U.S. Maritime Administration separately renewed an advisory on Sept. 9 stating that Iran continues to threaten and conduct strikes on commercial vessels in the Persian Gulf, Strait of Hormuz and Gulf of Oman. The advisory replaced one that expired the same day, making it a scheduled six-month renewal rather than a response to the week's strikes, The Defiant reported.
WTI Also Climbs As China Returns
Brent and WTI both rose 6% on the day, the ninth consecutive day of gains, with Brent at its highest level since May. Chinese demand has returned to the market after being suppressed, and the release of strategic reserves that had kept a lid on prices appears to be ending, according to InvestingLive. Separately, U.S. oil prices surged past $103 a barrel, a $6 gain on the day and a 20% rise over the month, the first time since May 20 that prices reached that level, Crypto Briefing reported, citing the Kobeissi Letter.
Inflation And Rate Bets Move With Oil
The Bureau of Labor Statistics reported producer prices for final demand rose 0.4% in August, against 0.1% in July. According to Thadeu Dos Santos, regional director at brokerage Infinox: "The figures reinforced concerns that inflation remains persistent" given elevated oil prices and a labour market that has proved more robust than anticipated. Traders raised the odds of a quarter-point Fed increase next week to 63.5% on Polymarket, up from 41.5% on Sept. 3. The 10-year Treasury yield reached 4.92%, its highest since Oct. 25, 2023, while the 30-year reached 5.34%. The European Central Bank also raised its key rates by 25 basis points on Thursday, taking the interest rate on the deposit facility to 2.50%. The S&P 500 fell 0.4% on Thursday afternoon. Gold dropped 1.3% to $4,405 an ounce over the same session.
Sources: The Defiant, InvestingLive, Crypto Briefing
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