Oil Surges Above $100 as ECB Hikes Rates Amid Inflation Fears

The price of oil surged above $100 per barrel on Thursday, prompting inflation fears and weighing on stocks in Asia and Europe. The European Central Bank (ECB) responded by hiking its policy rate to 2.5%, its second increase this year aimed at curbing inflation.

The catalyst for the selloff was attributed by some to the hot US Producer Price Index (PPI), which came in above forecast, while others pointed to the oil shock triggered by Middle East tensions. TradingView attributed the crypto selloff to the US PPI, but France 24 and Asia-focused outlets highlighted the $100 oil price as the main market driver.

Oil prices reached a high of $101.94 for Brent crude and $97.79 for West Texas Intermediate, their highest levels since May. Stocks and fixed income slumped in Europe, with the ECB hiking rates by 25 basis points as expected in a unanimous decision.

Saxo Markets' Neil Wilson noted that September is often a challenging month for Wall Street, historically the weakest period. UBS's Kiran Ganesh emphasized that higher oil prices mean higher inflation expectations, increasing the likelihood of interest rate hikes and higher bond yields.