Dollar Soars as Oil Prices Hit $100 Amid Middle East Tensions
The US dollar received a boost from higher U.S. Treasury yields on Friday, July 24th, as a spike in oil prices and renewed global trade tensions raised inflation stakes.
Brent oil prices climbed back above $100 a barrel after Yemen's Houthis struck two Saudi oil tankers in the Red Sea, extending the Middle East war to a second major shipping chokepoint. U.S. President Donald Trump promised 'major military punishment' for Iran and its Houthi allies.
The fresh turmoil in the Middle East and renewed trade tensions sent U.S. Treasury yields higher on inflation fears, with the benchmark 10-year yield rising to an over 18-month high above 4.7%. The 30-year yield held well above the 5% level, while 2-year yields were at their highest since February 2025.
Vishnu Varathan, Mizuho's head of macro strategy for Asia-Pacific, said 'the world must be prepared for a double whammy of tariffs, because essentially oil is a tariff… and the independent supply disruptions… there is a certain actual quantity-determined disruption… then there’s a price shock from the (trade) tariffs as well.'