US-Iran Strikes Send Oil Prices Soaring Above $100
The recent US-Iran strikes have rekindled concerns about a prolonged Middle East conflict, pushing regional oil benchmarks above $100 per barrel. This development is particularly concerning for crude prices as it may indicate a continued risk of supply disruptions in the region.
The rising bond yields are also adding to the pressure on oil prices. Global bond yields have surged to their highest since 2008, fueled by concerns about inflation and lower demand. The Federal Reserve's commitment to taming US inflation has sent 10-year Treasury bond yields to 4.76%, while other developed economies have seen similar increases.
This rise in bond yields will likely lead to higher borrowing costs for households and companies, slowing down economic activity and reducing demand for oil. As a result, the market is pricing an almost 60% chance that the Federal Reserve will hike rates by a quarter-point at its meeting this month.