Persian Gulf Tensions Fuel Sustained Energy Prices

The Persian Gulf crisis has shifted perceptions over the past quarter, as hopes of a resolution at end-June have faded and the status quo now looks set to persist. This means sustained high energy prices are likely to continue.

Resilient global growth supported by AI-related capital spending is also driving a recent bond-market repricing, with yields expected to hold through the fourth quarter.

The oil market remains a swing factor, but there are currently no signs of a US, Iran agreement. The European Central Bank and Federal Reserve are both expected to hike interest rates by 25 basis points in December, supporting a stronger dollar and higher yields.