Geopolitical risks in key chokepoints push Brent crude to $100pb before easing on renewed US-Iran talks over the weekend.
Global oil prices spiked to $100 per barrel mid-week amid escalating tensions in the Bab El Mandeb and Strait of Hormuz, up from near $70 just three weeks prior. The surge followed renewed attacks involving Iran, Saudi Arabia, and Houthi rebels, threatening critical shipping routes and Saudi oil diversion capacity.
Equities remained choppy, down 1.5-2% from early June peaks, while US and UK government bond yields tested multi-month highs. The 10-year UK gilt yield reached 5.1%, and US yields hit 4.7% before retreating slightly. Markets showed muted reaction to the geopolitical risks, with sterling-denominated equities up 0.6% for the week.
Oil prices pulled back to $88pb Monday after weekend negotiations between the US and Iran reduced fears of immediate escalation. The Bab El Mandeb Strait’s vulnerability to container traffic disruptions via the Suez Canal added to supply concerns.