Oil Prices Surge as Iran Strikes US Targets in Region

Oil prices surged Thursday after Iran launched fresh strikes against US targets in the region, but bond yields eased and stock markets stabilized following recent volatility.

The attack on US military bases in Kuwait, despite President Donald Trump's warning of further strikes, has deepened the ongoing impasse in the war. The stranglehold on the strategic Strait of Hormuz, through which about a fifth of world oil and liquefied natural gas normally pass, effectively closed, with energy costs unlikely to come down markedly anytime soon.

Brent North Sea Crude rose 1.5 percent to $97.09 per barrel, while West Texas Intermediate increased by 1.8 percent to $92.60 per barrel. Stock markets in Asia and Europe mostly showed modest gains or losses, influenced by Wednesday's rebound on Wall Street.

David Morrison, senior market analyst at financial services provider Trade Nation, attributed the jump in borrowing costs to 'investor concerns over high, and seemingly ever growing, levels of government debt' and 'inflation fears linked to higher energy prices thanks to the US war with Iran'. Investors expect the US Federal Reserve to raise interest rates later this month to combat rising costs, which may put upward pressure on bond yields.