Middle East Conflict Keeps Oil Markets Volatile; Bond Yields Stay
Elevated After Fed Decision
Oil
Prices Fluctuate
·
Oil prices swung between gains and losses on 30
July 2026 amid fears of an expanding Middle East conflict.
·
The United States and Iran resumed military
strikes, increasing geopolitical uncertainty.
·
Egypt confirmed that an unidentified drone
attacked two ships at a Mediterranean port the previous day.
·
Brent crude fell about 0.25% to
around US$91 per barrel after surging nearly 8% the previous day.
·
West Texas Intermediate (WTI) crude
also declined about 0.25% to around US$84 per barrel.
Shipping
Disruptions Remain a Key Concern
·
Markets remain focused on disruptions in the Strait
of Hormuz, through which nearly 20% of global oil supplies normally
pass.
·
Investors are also monitoring attempts by the Iran-backed
Houthi militia to restrict shipping through the Bab al-Mandab Strait.
·
The Bab al-Mandab route has become increasingly
important as Saudi Arabia uses it as an alternative export route to the
Strait of Hormuz.
Bond
Markets Reflect Inflation Concerns
·
U.S. Treasury yields remained elevated following
the Federal Reserve's decision to keep interest rates unchanged.
·
Investors questioned whether the Fed is
sufficiently committed to returning inflation to its 2% target.
·
The 30-year U.S. Treasury yield remained at 5.22%,
close to its highest level in nearly two decades.
·
The 10-year Treasury yield rose to 4.69%,
its highest level since January 2025.
·
Analysts noted that Fed Chair Kevin Warsh's
lack of a clear policy signal created uncertainty in financial markets.
·
While expectations of near-term rate hikes eased, long-term
bond yields remained elevated, reflecting persistent inflation concerns.
Global
Equity Markets
·
U.S. stock futures pointed
to a higher opening.
·
Asian markets were mixed:
o
Stock indices in South Korea and Taiwan
declined amid continued weakness in semiconductor shares.
o
Japan's Nikkei 225 gained 0.7%.
·
In Europe, the Stoxx Europe 600 index rose
about 0.5%.
Fuel
Prices Continue to Rise
·
The average U.S. gasoline price increased by
1 cent to US$4.10 per gallon.
·
Gasoline prices are now 37% higher than
before the Middle East conflict began.
·
The average diesel price also rose by 1
cent to US$5.34 per gallon.
·
Diesel prices have increased 42% since the
start of the conflict.
·
Fuel prices generally lag changes in crude oil
prices by several days, suggesting further increases remain possible if oil
prices stay elevated.
Oil
prices moved between gains and losses on Thursday as the conflict in the Middle
East threatened to expand.
On
Thursday (30.07.2026), the United States and Iran resumed strikes and Egypt confirmed
that an unidentified drone was responsible for an attack on two ships in a port
on the Mediterranean Sea the day before.
Separately,
bond yields remained elevated after a Federal Reserve meeting on Wednesday left
investors questioning whether the central bank was committed to keeping inflation
contained.
Oil prices seesaw.
·
The
price of Brent crude, the global benchmark for oil, was fell about a quarter
point to $91 a barrel on Thursday, a day after jumping nearly 8 percent.
·
West
Texas Intermediate crude, the U.S. benchmark, was down about the same amount to
$84 a barrel.
·
Investors
and analysts are focused on the continued disruption to shipping in the Strait
of Hormuz, the narrow waterway between Iran and Oman that is a vital trading
route for oil and natural gas that normally carries as much as one-fifth of the
world’s oil supply. In addition, the market is closely watching efforts by the
Iranian-backed Houthi militia in Yemen to restrict traffic in the Bab al-Mandab
Strait at the southern end of the Red Sea, which Saudi Arabia has used as an
alternative to the Strait of Hormuz.
Bond investors are on
alert.
·
U.S.
government borrowing costs stayed elevated on Thursday as investors seemed
concerned about whether the Federal Reserve would be fully committed to
bringing inflation down to its target.
·
The
yield on 30-year Treasuries held at 5.22 percent after jumping to a near
two-decade high on Wednesday after the Fed held interest rates steady for a
fifth consecutive meeting. Three Fed policymakers dissented from the decision,
voting to raise rates.
·
The
yield on 10-year Treasury notes rose to 4.69 percent, the highest since January
2025.
·
The
reluctance of Fed Chairman, Kevin Warsh, “to send a clear policy signal also
made the messaging somewhat muddled at times,” Ellie Henderson, an economist at
Investec, wrote in an analyst note. Short-term yields fell as traders reduced
bets of rate hikes this year, but long-dated bonds rose.
Stocks are mostly higher.
·
Futures
on the S&P 500 were higher, pointing to an increase when stocks resume
trading in the United States on Thursday.
·
Stocks
in Asia were mixed. Indexes in South Korea and Taiwan, both heavily exposed to
recent volatility in semiconductor stocks, closed lower. The Nikkei 225 in
Japan rose 0.7 percent.
·
In
Europe, the Stoxx 600, a broad-index that tracks the region’s largest
companies, rose about 0.5 percent.
Gasoline prices tick
higher.
·
Gas
prices rose one cent on Thursday to a national average of $4.10 a gallon,
according to the AAA motor club. The increase has raised the cost for drivers
by 37 percent since the war began.
·
Gas
prices don’t move in lock step with crude, usually trailing increases or drops
by a few days.
·
The
average price of diesel also ticked up one cent to $5.34 on Thursday, up 42
percent since the start of the war.