Oil Prices Soar Above $100 as Middle East Tensions Escalate
Global oil prices have broken through $100 per barrel for the first time since July, driven by escalating tensions in the Middle East and uncertainty over the duration of the conflict. The price surge has contributed to a new wave of inflation fears and rate hike expectations, pushing up borrowing costs across developed markets.
The US reported destroying five Iranian oil tankers on Tuesday, prompting Iran's Revolutionary Guards to fire ballistic missiles at a base in Jordan and attack 10 ships near the Strait of Hormuz, including two US vessels. The Strait of Hormuz is a key shipping route for Saudi Arabia, which relies on it to export oil.
The price spike has raised concerns about inflation and interest rates, with the benchmark 10-year US Treasury yield hitting its highest level since 2023, rising above 4.9%. The 30-year yield also reached a nearly two-decade high above 5.38%, while the 2-year yield jumped to almost 4.6%, its highest point in 14 months.
Traders and energy companies disagree about how much oil is exiting the Gulf, adding to supply uncertainty and fueling concerns about the potential duration of the conflict. Top White House advisers have privately warned President Trump that the conflict could outlast his presidency, which ends in January 2029.