At the market open on 8/7, crude oil prices for Brent and WTI both increased by nearly 3%. Brent crude is currently priced at 76 USD per barrel, while WTI trades at 72 USD.
Oil prices rose as the US military launched a series of airstrikes targeting sites in southern Iran the same day, following accusations that Tehran had attacked ships passing through the Strait of Hormuz. This development led investors to worry that a ceasefire would be difficult to maintain.
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Brent oil price movements over the past year. *Chart: Trading Economics.*
The UK Maritime Trade Operations (UKMTO) reported three ships were attacked near the Omani coast while transiting the Strait of Hormuz on 7/7. Among these were Qatar's Al-Rekayyat liquefied natural gas (LNG) tanker and a Saudi-flagged oil tanker. This marks the first time a Qatari LNG vessel has been targeted since the conflict began.
Consequently, the US Treasury Department revoked a temporary waiver of sanctions on Iranian oil. This mechanism, announced by Washington in june, had temporarily allowed Iran to produce, sell, and transport crude oil and related products until 21/8. The new decision states that this waiver is now valid only until 17/7.
Developments in the Middle East also caused global gold prices to decline. At the close of trading on 7/7, gold lost nearly 60 USD per ounce, settling at 4,104 USD. On the morning of 8/7, prices briefly fell below the 4,100 USD mark.
Investors are now awaiting the minutes from the US Federal Reserve's (Fed) june meeting for further clues on the agency's monetary policy. "I believe the Fed is currently very focused on curbing inflation. Therefore, it's highly probable they will maintain interest rates at this level for longer," stated Peter Grant, Vice President of Zaner Metals, to Reuters.
The CME FedWatch Tool indicates that investors currently anticipate a 60% probability of a Fed rate hike in september. Gold typically faces pressure when inflation concerns may lead to higher interest rates, increasing the opportunity cost of holding the precious metal.
Ha Thu (according to Reuters)
