Brent Crude Tops $105 as Iran War Escalates — SkimNews
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- Brent crude rose more than 4% Thursday to $105 per barrel — the first time above that level since May — while US crude briefly hit $100 before paring back to $99, driven by renewed fighting in the Strait of Hormuz and Red Sea and Houthi strikes on Saudi Arabia.
- S&P Global Energy said for the first time since the war started it no longer assumes Middle East oil production returns to pre-war levels by end of 2027, now projecting prices to stay in the $80–$100 a barrel range through next year.
- President Donald Trump on Wednesday contradicted the analysts' outlook, promising 'prices right after this very important election on November 3rd will be plummeting' and that 'the war will be over very shortly after the election.'
- U.S. Treasury yields spiked sharply, with the 10-year note climbing 9 basis points to 4.93% — its highest level since October 2023 — despite the Treasury announcing up to $6 billion in bond buybacks, which strategist Mike O'Rourke likened to 'figuratively shooting a BB gun at an elephant.'
- Federal Reserve rate-hike odds surged as wholesale inflation data showed August pickup, with traders pricing a 70% chance of a hike at next week's meeting, up from 49% just one week earlier, per CME FedWatch.
- Diesel prices climbed to a record national average of $5.98 a gallon Thursday according to AAA data — a trend Rystad Energy economist Claudio Galimberti called 'less dangerous' in crude but more concerning in refined products used by businesses and consumers.
- The European Central Bank raised its main interest rate by a quarter percentage point to 2.5% on Thursday, its second hike this year, citing inflation pressures 'set to remain well above target for an extended period' due to the energy shock.
- Capital Economics' Jason Tuvey warned that the 'step up in attacks in the Strait of Hormuz and by the Houthis against Saudi Arabia suggests that Iran and its proxies are trying to regain the initiative,' raising risks of further energy-price increases in coming weeks.
Why it matters: Consumers and freight-heavy industries face a record $5.98 diesel price that will ripple through shipping and trucking costs, while the 70% market-implied odds of a Fed rate hike — up from 49% a week ago — mean borrowing costs climb just as energy bills already squeeze household budgets. S&P Global's revised assumption that the Strait of Hormuz won't normalize by end-2027 directly contradicts Trump's election-timing promise of plummeting prices, signaling markets are pricing in a prolonged energy shock rather than the rapid resolution the White House projects.
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