Renewed US-Iran tensions over the Strait of Hormuz fuel concerns over supply disruptions, inflation and higher interest rates……
Oil prices moved higher on Tuesday as renewed tensions between the United States and Iran heightened fears of another round of military confrontation and possible disruption to global energy supplies.
The latest gains came after Washington and Tehran exchanged attacks over the weekend, raising concerns that the fragile calm that had prevailed in recent weeks could collapse into a broader conflict.
The development has also renewed concerns about inflation, particularly if disruptions around the strategic Strait of Hormuz affect the movement of crude oil and other commodities. Rising inflation could, in turn, increase pressure on central banks to maintain or raise interest rates, with investors already adjusting their positions in global financial markets.
The conflict between the United States and Iran has now entered its sixth month, with neither side appearing close to a decisive resolution. Tehran has kept the Strait of Hormuz closed, while Washington continues to enforce a counter-blockade targeting Iranian ports.
The latest escalation followed a US military operation on Sunday, when American forces struck an Iranian island in the Strait of Hormuz.
US officials said the attack targeted rocket launchers on Larak Island as part of efforts to prevent Iran from placing mines in the strategically important waterway.
Iran responded by launching attacks against US military positions in Jordan and the United Arab Emirates.
The exchange has raised fresh concerns over the possibility of a return to sustained hostilities, particularly after US President Donald Trump issued a warning that Washington would retaliate.
“We’re going to hit them hard,” Trump said, according to a Fox News reporter who spoke to him briefly. “There will be a response.”
The latest confrontation comes after several weeks of relative calm and follows a shift in the Trump administration’s approach towards Tehran.
Washington has recently placed greater emphasis on what it describes as “economic warfare”, with the United States continuing to increase pressure on Iran through economic measures.
US Treasury Secretary Scott Bessent said the administration would maintain the pressure campaign against Tehran.
“We are going to continue exerting pressure, and we’ve had very good discussions here already.”
Bessent, speaking to reporters on the sidelines of a G20 meeting in North Carolina, said a significant development in the campaign could emerge “within weeks or months”.
Meanwhile, Trump is expected to meet with executives from the US oil refining industry on Tuesday as his administration seeks ways to bring down rising domestic gasoline prices.
The increase in fuel costs has become a growing political concern for the Republican Party as the country approaches November’s midterm elections.
The latest rise in crude prices comes against the backdrop of growing concerns about inflation and monetary policy.
Investors are closely watching a series of economic indicators expected this month, particularly the US jobs report and consumer price index, which could influence the Federal Reserve’s decision when policymakers meet on September 16.
Expectations of a possible interest rate increase have risen following a hawkish speech by Fed Chairman Kevin Warsh on Friday.
The prospect of higher inflation and borrowing costs pushed the yield on the benchmark 10-year US Treasury note to its highest level since January 2025.
The pressure has also spread to Asian financial markets, where the yield on Japan’s 10-year government bonds climbed to three per cent, its highest level in 30 years.
The Japanese yen also weakened against the US dollar, despite comments from Bessent to CNBC that he expected Japanese authorities to take steps to support the currency.
The yen had previously recovered some ground following a historic joint intervention after the currency fell to a 40-year low, but it has since surrendered about half of those gains.
Bessent’s remarks were interpreted by some investors as a signal that the Bank of Japan could come under pressure to tighten monetary policy when it holds its meeting later this month.
Asian equities were largely under pressure during Tuesday’s trading session.
Tokyo, Hong Kong, Shanghai, Sydney, Singapore and Wellington all recorded losses, while markets in Seoul, Taipei, Manila, Mumbai, Bangkok and Jakarta moved higher.
European markets also delivered mixed performances after the long weekend.
London’s FTSE 100 slipped when trading resumed, while Frankfurt also moved lower. Paris, however, edged higher.
In the corporate sector, shares of fast-fashion retailer Shein fell sharply during its much-anticipated debut on the Hong Kong stock market.
The company, which raised $1.7 billion in a high-profile initial public offering, initially saw its shares fall by 10 per cent before recovering some of the losses. The stock was later trading about four per cent lower.
Taiwanese semiconductor company MediaTek, on the other hand, recorded a strong performance, with its shares jumping nearly 10 per cent after US technology giant Nvidia announced a $3.5 billion investment in the chipmaker.
Market participants are now closely monitoring developments around the Strait of Hormuz, as any further military escalation between Washington and Tehran could have significant implications for crude supplies, inflation and global financial markets.
Key figures at around 0715 GMT
West Texas Intermediate crude was up 0.8 per cent at $86.48 per barrel, while Brent North Sea crude gained 0.7 per cent to trade at $91.16 per barrel.
Tokyo’s Nikkei 225 fell 0.2 per cent to 66,215.34 at the close, while Hong Kong’s Hang Seng Index declined 0.8 per cent to 25,366.66.
The Shanghai Composite dropped 0.2 per cent to 3,979.89.
In London, the FTSE 100 was down 0.2 per cent at 10,806.88.
The dollar rose to 159.97 yen from 159.77 yen, while the euro fell to $1.1600 from $1.1618.
The pound declined to $1.3540 from $1.3550, while the euro eased to 85.69 pence against the pound from 85.74 pence.
In New York, the Dow Jones Industrial Average ended the previous session 0.7 per cent lower at 53,185.90.
