$BZ=F $SPY $QQQ
- Brent crude rose about 1% to $114.44 a barrel, extending a rally that has lifted oil roughly 60% since the US-Israeli war with Iran began and about 90% in the year to date.
- Reports that Washington may pursue renewed military strikes on Iran after the midterms, rather than a diplomatic track, helped push prices higher as the conflict entered its eighth month.
- Intensified Houthi attacks on Saudi facilities and continued projectile fire near the Strait of Hormuz are keeping shipping routes dangerous.
- Ukrainian strikes on Russian diesel refineries are adding to supply worries, reviving inflation concerns and boosting bets on faster central bank rate hikes.
- Global equities wobbled as fears about AI valuations weighed on stocks, while British retail sales fell as shoppers cut back.
Oil prices climbed to a five-month high on Friday, with Brent crude, the international benchmark, up about 1% at $114.44 a barrel. The move extends a rally that has added roughly 60% since the start of the US-Israeli war against Iran and about 90% so far this year, according to figures cited by broker Interactive Investor.
Supply Fears Drive the Rally
The immediate trigger was widespread reporting that the US is considering renewed military strikes on Iran after the midterm elections rather than pursuing a diplomatic route. That was enough to lift prices, as a conflict many had expected to be brief is now in its eighth month. At the same time, attacks by Houthi rebels on Saudi Arabia’s facilities have intensified this week, and for ships attempting to cross the Strait of Hormuz the journey remains dangerous, with projectiles still being fired. Ukraine’s bombardment of Russian diesel refineries is adding to supply concerns. The combination is once again fanning inflation fears. Companies are unlikely to keep absorbing higher energy and freight costs indefinitely, and the longer the conflicts rage, the greater the chance that higher prices become embedded in the economy. That logic explains why bets have increased on central banks raising rates more rapidly.
Equities Wobble as AI Doubts Bite
Global stocks were unsteady as anxiety about artificial intelligence valuations spread through markets. The unease comes as investors question whether the enormous spending and lofty valuations attached to AI-linked companies can be justified if borrowing costs rise and energy costs stay elevated. Higher rates tend to compress the present value of future earnings, which hits long-duration growth names hardest.
UK Consumers Pull Back
In Britain, retail sales fell as shoppers cut back, a sign that household budgets are under strain. The weakness in consumer spending sits awkwardly alongside the energy-driven inflation pressure, leaving policymakers caught between supporting demand and containing prices. For markets, the near-term path depends heavily on two variables: whether the Iran conflict escalates further, and whether central banks respond to energy costs with tighter policy. A sustained oil price above $110 would keep inflation risks alive and could weigh on equities, particularly the AI-linked names that have driven index gains. Any signal of de-escalation, by contrast, could quickly unwind part of the risk premium now baked into crude.
Sources: theguardian.com · USOIL Newsroom · Financial Times · Reuters · WSJ