Oil Jumps 3.5% as US-Iran Conflict Shuts Strait of Hormuz
WTI crude surged to $73.90 Monday as US-Iran hostilities halted Strait of Hormuz traffic, rattling global markets.
Oil prices surged Monday as ongoing US-Iran military exchanges and a complete halt to shipping traffic through the Strait of Hormuz kept energy markets on edge, pushing WTI crude up 3.5% to $73.90 per barrel during the European session. The two countries remain unable to engage in direct talks, with Iran reaffirming it will not honor any deal terms unless the United States does the same, while mediators continue working behind the scenes to find an off-ramp.
The geopolitical tension is casting a shadow over broader financial markets. US equity futures slipped, with S&P 500 contracts down 0.3% and Nasdaq futures falling 0.9% — though both trimmed earlier losses — as tech shares led pre-market declines. European equities managed to hold modestly higher, suggesting regional markets are absorbing the shock more steadily than their American counterparts.
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Currency markets reflected a mild reversal of early safe-haven dollar demand. EUR/USD recovered from around 1.1400 to settle near 1.1430, while GBP/USD stabilized at approximately 1.3390 after paring initial losses. USD/JPY pulled back slightly to 162.10, partly influenced by headlines around Japan's Government Pension Investment Fund potentially adjusting its portfolio allocation.
Federal Reserve Bank of New York President John Williams added a monetary policy dimension to the session, signaling he would back interest rate hikes if monthly core inflation averages above 0.2%. That hawkish stance weighed on sentiment alongside geopolitical risks, with 10-year Treasury yields edging up 1 basis point to 4.579%. Gold retreated 1.4% to $4,063, while Bitcoin slid 2% to $62,863, as investors rotated toward cash rather than traditional safe havens.
With the Strait of Hormuz — a critical chokepoint for global oil flows — still closed, traders are bracing for further volatility. Attention later this week will pivot to the US CPI report, which could further shape Fed rate expectations. Continue reading at Forexlive.
