Middle East conflict escalates oil prices

Middle East tensions drive Brent crude to $112 per barrel, highest since July 2024, amid Strait of Hormuz risks and vessel attacks. This supports USD and raises inflation concerns for central banks.

Middle East tensions and Strait of Hormuz risks have driven Brent crude to $112/bbl, the highest since July 2024, boosting oil prices while supporting USD amid inflation pressures.[event] This raises central bank inflation concerns, recession risks, and potential growth slowdowns, negatively affecting equities and bonds.

• Why it matters now: Escalating Middle East tensions disrupt Strait of Hormuz, a key chokepoint for ~25% global oil trade, spiking Brent to $112/bbl and inflating shipping insurance.
• Short-term reaction: Shipping halts via vessel attacks, insurer pullbacks, and rerouting; energy/supply chain volatility rises.
• Medium-term implications: Persistent inflation pressures on central banks, higher food/transport costs.
• Assets benefiting: Oil producers, USD; risked: Import-dependent economies, global trade.
• Key uncertainty: De-escalation timeline and Hormuz access restoration.