Oil Price Surge Sparks Stock Market Turmoil
Asian stocks sank on September 10 as oil prices continued to rise in response to escalating tensions in the Middle East. The Brent crude price broke above $100 for the first time since July, and has surged more than 20% in less than a week due to hostilities in the Strait of Hormuz.
The US and Iran have been exchanging strikes around the crucial waterway, which is an increasingly important route for oil exports. This has led to speculation that central banks will raise interest rates to combat inflation fears, with the European Central Bank expected to do so on September 10.
US diesel prices are already at a record of nearly $6 per gallon, and Iran said it hit more than a dozen ships attempting to pass through the strait. The country has also expanded its no-go zone outside the waterway in response to US forces destroying five Iranian oil tankers the previous day.
Meanwhile, Saudi Arabia is entangled in a conflict with Houthi rebels who are striking oil facilities in the kingdom as part of an offensive towards the Red Sea's Bab al-Mandab chokepoint. The waterway is critical for Saudi oil exports, and Brent crude prices have risen to $101.94, while West Texas Intermediate peaked at $97.79, the highest since May.