U.S.-Iran Conflict Restarts, Oil Prices Instantly Soar
During the Asian trading session on August 31, international oil prices rose rapidly, with Brent reclaiming $90 and WTI rising more than 3% to $86.02 at one point. The direct catalyst came from the renewed escalation of U.S.-Iran military conflict over the weekend: the U.S. launched strikes on Iran's Larak Island near the Strait of Hormuz, and Iran subsequently reportedly fired ballistic missiles at two U.S. military bases in Jordan. Geopolitical risk has re-escalated from diplomatic friction to direct military action, prompting the market to quickly price back in supply risk premiums.
Strait of Hormuz Becomes Trading Focus Again
The Strait of Hormuz handles nearly one-fifth of global oil transportation. Around the time of the conflict, trackable commercial vessel traffic dropped to about five ships per day. The U.S. stated that Iran's Revolutionary Guard is preparing to use rockets and mines to threaten shipping, and Trump also claimed that Iran's key oil export hub Kharg Island was attacked, although related news has not been officially confirmed by either side. As long as the risk of shipping disruption cannot be eliminated, it will be difficult for oil prices to completely relinquish the geopolitical premium.
Why Does Rising Oil Prices Simultaneously Pressure Gold?
Oil prices nearing $90 again have intensified inflation concerns. Following last week's Jackson Hole symposium, hawkish remarks from Fed Chair Wash pushed U.S. bond yields higher, with the market pricing in a September rate hike probability of around 57%. Rising energy prices further reinforce expectations that interest rates will remain high or even increase further, putting pressure on non-yielding gold, with spot gold once falling below $4400.
After $86, What is the Market Watching?
With WTI standing above $86, the next step depends on whether the conflict affects actual exports and shipping. If traffic through the Strait of Hormuz continues to decrease and the risk to Kharg Island is confirmed, $90 Brent and high WTI levels may find support; if the military conflict cools rapidly, the risk premium could be relinquished. The market will also focus on Friday's U.S. August non-farm payrolls data, which will influence the Federal Reserve's interest rate assessment and affect oil prices via the U.S. dollar and demand expectations.
