Global oil prices rise again

Bangla Press Desk:  Global oil prices jumped 5% amid fears that the conflict in the Middle East could spread further and that a hurricane approaching the US coast could disrupt oil production. At the same time, heavy selling pressure hit stock and bond markets around the world.

On Thursday (Oct 8), Brent crude prices rose 5% in international markets to $105.30 a barrel. The rise in oil prices has renewed concerns among investors about inflation.

In the UK, the yield on 10-year government bonds rose six basis points to 5.515%, its highest level since July 2007. Meanwhile, the yield on 30-year bonds increased three basis points to 6.0117%. On Wednesday, it had climbed to 6.036%, the highest since January 1998.

Rising government borrowing costs are also putting further pressure on John Healey, who is preparing to present his first budget on Oct 28.

The market turmoil began after a report by The Atlantic said the White House had instructed the Pentagon to draw up potential plans for an attack on Iran ahead of the US midterm elections. Citing unnamed officials from the Donald Trump administration, the report said discussions were still underway over the nature and targets of any possible attack, as well as whether an attack would take place at all.

The report weakened expectations that Trump would refrain from further escalating the conflict with Iran before next month’s midterm elections. It said a limited operation could be launched initially, followed by larger military action after the midterm elections.

A fresh US attack on Iran could pose further risks to global oil supplies from the Middle East. The war between the United States and Israel and Tehran has now entered its eighth month. Increased attacks on oil tankers in the Strait of Hormuz have reduced shipping through the strategically important waterway, deepening concerns over oil supplies.

On Wednesday, a tanker was also targeted by a projectile near Qatar’s northern coast. The UK Maritime Trade Operations said there were casualties in the attack.

Concerns over a decline in oil production in the Gulf of Mexico also contributed to the rise in prices. Tropical Storm Isaias has become the first hurricane of the Atlantic season. As the storm moves toward the region, Shell and Chevron have announced plans to shut down production operations. The storm is forecast to make landfall on Friday or Saturday.

Meanwhile, Danish shipping company Maersk has also raised concerns over higher fuel costs. The company said on Thursday that it was increasing emergency fuel surcharges for the collection of export cargo and delivery of imported goods.

The rise in energy prices has intensified concerns about inflation worldwide. Expectations are also growing that central banks may have to raise interest rates to bring inflation under control.

Government bond prices continued to fall around the world on Thursday. In France, the yield on 10-year government bonds rose six basis points to 4.931%. Concerns over the country’s rising debt and government spending had pushed the yield to a 24-year high of 4.994% last week.

The yield on Germany’s 10-year government bonds, a key benchmark for European debt markets, rose two basis points to 3.504%. The yield on US 10-year Treasury bonds also increased five basis points to 5.331%.

Stock markets around the world were also affected. Japan’s Nikkei index fell 1.4%, while South Korea’s Kospi index dropped 2.6%. The Stoxx Europe 600 index, which tracks major European companies, declined 0.9%. The UK’s FTSE 100 index was also down 0.4% at the start of trading.