Oil Tops $100 as Middle East Tensions Escalate

Oil prices have breached $100 a barrel for the first time since July 24 due to escalating conflict in the Middle East. Brent crude futures surged as much as 3 per cent to a session high of $100.95 after Iran fired ballistic missiles at a U.S. base in Jordan, raising worries about oil supplies from the region.

The surge in energy prices has driven concerns that higher inflation will prompt central banks to keep monetary policy tighter for longer. Stock markets across the globe have come under pressure, with U.S. stock index futures falling by half a percent and setting Wall Street indexes up for a third consecutive day of losses.

Societe Generale multi-asset strategist Manish Kabra noted that $100 is a 'psychological number' but warned that crude prices need to hit $150 to create a major drawback in the demand cycle. However, he cautioned that if price margins for refined products do not decline, diesel prices will increase and have an impact on inflation and services.