Oil Prices Jump as Markets Brace for US Inflation Data, Hormuz Crisis Deepens

Global oil prices climbed again on Wednesday while stock markets delivered a mixed performance as investors awaited crucial US inflation data that could influence the Federal Reserve’s next interest-rate decision.

The latest market moves come amid continued uncertainty over the conflict involving Iran and the effective closure of the Strait of Hormuz, a key route for global energy supplies.

Inflation keeps investors on edge

Traders are closely watching the US Consumer Price Index (CPI), which is expected to provide fresh clues about the direction of interest rates.

Inflation has remained above the Federal Reserve’s two per cent target for an extended period, while the economic impact of the Iran conflict has added further pressure to energy prices.

The Federal Reserve kept interest rates unchanged at its July meeting, although three members of its policy committee pushed for an increase.

Investors are now betting that the central bank could raise borrowing costs before the end of the year, with some anticipating more than one increase.

Analysts noted that another inflation report and employment report will be released before the Fed’s September meeting, making the upcoming data particularly important.

Hormuz tensions push crude higher

Oil prices have received additional support from the continuing uncertainty surrounding the Strait of Hormuz.

Diplomatic efforts between Washington and Tehran have yet to produce a breakthrough on reopening the crucial waterway.

A statement by Pakistan’s defence minister that the two sides were close to an arrangement briefly offered hope of a resolution, but optimism faded after both Washington and Tehran hardened their demands.

Concerns also increased after the US military said a helicopter fired missiles at the engine room of a Panama-flagged cargo ship that attempted to breach the American blockade of Iranian ports.

Meanwhile, reports that Iran and Oman were discussing a possible reopening of Hormuz to some shipping did little to calm markets.

Both major crude benchmarks extended their gains, rising about 14 per cent over the past week.

Forex.com analyst Fawad Razaqzada said the market remained focused on the fact that the strait was still effectively closed and there had been little progress between the US and Iran.

He warned that negotiations alone should not be mistaken for an actual breakthrough, meaning risks to oil prices remain tilted upward.

Asian stocks mixed

Equity markets moved in different directions ahead of the US inflation figures.

South Korea’s Kospi was among the strongest performers, climbing more than three per cent as technology stocks recovered some of their recent losses.

Chipmakers SK hynix and Samsung led the rebound, helped by strong earnings reports from US artificial intelligence companies CoreWeave and Super Micro Computer.

Markets in Tokyo, Shanghai, Taipei, Manila and Jakarta also recorded gains, while Hong Kong, Sydney, Singapore and Wellington declined.

Market snapshot

At about 0210 GMT:

WTI crude: up 0.7% at $83.78 per barrel
Brent crude: up 0.6% at $89.40 per barrel
Nikkei 225: up 0.1% at 67,002.60
Hang Seng: down 1.1% at 25,375.72
Shanghai Composite: up 0.1% at 3,939.29

In currency markets, the euro and pound weakened slightly against the dollar, while the dollar edged higher against the yen.

With oil prices rising and the latest US inflation figures looming, investors are now watching closely for signs that could determine whether the Federal Reserve keeps rates steady or moves toward tighter monetary policy later this year.