Oil jumps to $105, pushing up chances of a US interest rate increase

What the report says

Oil prices rose sharply in trading on Thursday, with Brent crude briefly reaching about $105 a barrel and US benchmark West Texas Intermediate moving above $100, according to Al Jazeera’s report citing AP and Reuters. The move came after a surge in attacks on oil tankers and other shipping in the Middle East, which traders fear could disrupt supply further. The article said prices had climbed more than 30 percent from early-August lows.

The report linked the price jump to escalating tensions around the Strait of Hormuz and the Red Sea. It said Iran-aligned Houthis took control of Yemen’s port of Mocha, and that Iran said it had attacked 10 ships near the strait after the United States hit five Iranian oil tankers. Iran’s Revolutionary Guard warned it would respond to any further attacks. Al Jazeera also noted that a lasting US-Iran agreement to stop attacks did not materialize and that renewed fighting has kept markets on edge.

The spike is adding to inflation concerns and putting pressure on financial markets. The article said US gasoline prices have risen to nearly $4.28 a gallon on average, and that higher fuel costs can feed into broader transport and consumer prices. Traders were pricing in a higher chance that the Federal Reserve will raise interest rates at its next meeting, with the probability cited near 70 percent, up from 61 percent the previous day.

Analysts quoted in the report said the outlook will also depend on Chinese demand, which has recently improved after a period of weaker buying. More Chinese imports could reinforce the rally, while softer demand could ease it.