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Oil prices are rising higher for the third consecutive session and keeping pressure on global markets.
Brent crude – the international benchmark for oil prices – climbed above $95 Wednesday morning, marking it highest level in nearly six weeks.
It follows a renewal of hostilities between the US and Iran leading to heightened concerns around a lack of safe shipping routes through the Middle East for oil.
The US military kicked off fresh strikes against Iranian targets around the Strait of Hormuz, which President Donald Trump said were retaliation for Tehran’s attempts to lay mines in the narrow waterway and for an earlier attack on a US military base. Trump has also warned of a larger response.
The soaring energy price is keeping pressure on global markets with the global bond rout deepening over the last few days.
UK borrowing costs hit their highest level since the financial crisis as gilts were swept up in the mass rout. The yield hit an 18-year high of about 5.2 per cent while longer term gilt yields jumped to 5.9 per cent in early trading on Tuesday.
“We are now just two months away from the US mid-term elections, and President Trump shows no sign of scaling back the war in Iran to win votes, even though the conflict is not popular at home,” Kathleen Brooks, research director at XTB, said.
“This could trigger volatility in the coming weeks, as investors fret that elevated oil prices could be here to stay.”