Oil Prices Rebound Below $100 Amid Market Relief

The Brent North Sea oil contract dropped below $100 per barrel on Friday after surging past that milestone the previous day due to escalating Middle East strikes. The decline of more than two percent in Brent and the US West Texas Intermediate contract helped stabilize US and European stock markets.

Despite a fresh round of strikes by the United States against Iran, market relief came as ships were able to pass through the Bab al-Mandeb strait, a crucial passage into the Red Sea. Commodity analyst Giovanni Staunovo from UBS noted that 'ships with Saudi crude are still crossing... so for now, it is not a full blockade, reducing a bit the risk of an even tighter oil market.'

Wall Street opened broadly stable on Friday, but tech stocks continued to struggle, with the Nasdaq Composite dipping 0.1 percent. Analyst Patrick O'Hare from Briefing.com said the recovery was 'not a robust response given the scope of yesterday's losses,' but 'it is something to build on for a market that had its foundation shaken yesterday.'

Meanwhile, government bond yields jumped, with the yield on 10-year US Treasuries hitting an 18-month high. Expectations of interest rate hikes have risen, with David Morrison from Trade Nation noting that 'perhaps more seriously, the CME's FedWatch Tool shows a 90 percent probability of at least one 25-basis point rate hike before year-end.'

The Middle East war and concerns about artificial intelligence (AI) hardware spending are putting pressure on markets. Tech firms Alphabet and Tesla took hits as investors questioned when they will see returns from massive capital expenditures.