Hormuz Situation Unclear; Brent Rallies Again
Oil prices rose again during Asian trading on Friday (Aug 7) as the likelihood of a permanent agreement to reopen the Strait of Hormuz remained uncertain. Brent crude climbed 1.4% to US$83.65 per barrel, while West Texas Intermediate (WTI) gained 1.3% to reach US$78.32 per barrel.
Tensions escalated following reports that Iran intends to restrict U.S. and Israeli vessels passing through the Strait of Hormuz. Tehran is also reportedly planning to demand compensation from nations deemed hostile before granting passage. Reports of attacks on targets near the strait's entrance further heightened market concerns regarding energy supply security.
Rising oil prices have renewed market anxiety over inflationary pressures. The yield on the 10-year U.S. Treasury note held steady around 4.68% after rising seven basis points in the previous session. Investors are assessing whether higher energy costs might prompt the Federal Reserve to maintain high interest rates for a longer period.
Market attention is now focused on the U.S. employment report. Economists forecast an increase of 80,000 in Nonfarm Payrolls for July, following a rise of 57,000 in June. Data showing excessive strength could reinforce the view that the Fed does not yet need to loosen policy, whereas weak data could spark fears of an economic slowdown.
Market Impact
Brent prices may continue to rise as long as uncertainty regarding the reopening of the Strait of Hormuz persists. Higher oil prices could support the U.S. dollar and Treasury yields by stoking inflation concerns, though they could simultaneously weigh on stock markets. Meanwhile, gold prices remained relatively flat, as support stemming from geopolitical risks was offset by high yields and investor caution ahead of the Nonfarm Payrolls data release. (gn)
Source: Newsmaker.id
