Middle East war pushes oil prices to highest level since late July as US-Iran strikes resume

The return of direct missile exchanges between Iran and the United States immediately jolted oil markets. WTI crude traded at $90.74 a barrel overnight, up 0.58% and at its highest level since late July. Brent rose 0.88% to $95.45.

The move followed even steeper gains a day earlier, when WTI climbed 5.20% and Brent 4.60%. Investors are again worried about energy supplies and the prospect of renewed tension around the Strait of Hormuz.

The escalation came after a month of relative calm, during which Washington had focused on economic warfare. Iran attacked US military bases in the Gulf on Wednesday in response to a new wave of American strikes, the second in several days.

The effective closure of the Strait of Hormuz has intensified the concern. About one-fifth of the world’s oil and gas normally passes through the waterway, and sustained high energy prices are feeding fears of inflation. Government borrowing costs have risen as markets anticipate higher interest rates, while stock markets have fallen.

Bond yields have reached levels not seen for years in several major economies. The yield on Britain’s 30-year government bond reached its highest point since 1998, while its 10-year yield reached a level last seen during the 2007-2008 global financial crisis. Japan’s 10-year yield reached a 30-year high, and the US 30-year Treasury yield approached its 2007 level.