Brent Crude Surges Above $90 as US-Iran Conflict Escalates Again

The US-Iran conflict has escalated again, pushing international oil prices above $90 and putting pressure on US stocks and gold. The re-escalation of tensions over the weekend pushed Brent crude up by 2.72% to close at $90.68, with WTI crude advancing 3.42% to close at $86.30.

The conflict is driving concerns about supply disruption risks in the Strait of Hormuz and rising energy prices could drive up inflation. The hawkish comments from Federal Reserve Chairman Warsh also weighed on the market, sending US Treasury yields higher and further boosting expectations of a September rate hike.

Energy stocks bucked the trend to move higher, with oilfield services giant Halliburton rising 1.85% and refiner Valero Energy gaining 1.86%. In contrast, the utilities sector came under pressure, with PG&E plummeting 20.06% due to a California Senate bill amendment failure.

The US Strategic Petroleum Reserve dropped to its lowest level since November 1982, with crude oil inventories falling by approximately 3.1 million barrels last week. The further decline in US strategic reserves has drawn heightened market focus to the US capacity to cope with potential energy supply shocks.