Oil Prices Surpass $90 as Dollar Falls Amid US-Iran Conflict Escalation

On Monday, oil prices surged by 3%, exceeding $90 per barrel, while the US dollar index declined against other major currencies. Gold prices remained stable during trading as the conflict between the United States and Iran expanded, disrupting energy shipments through the Strait of Hormuz.

According to Reuters, Brent crude futures increased by $2.77, or 3.14%, reaching $90.87 per barrel, marking the highest level since June 11. This gain followed a 15.9% rise last week, the largest weekly increase since April. Meanwhile, West Texas Intermediate crude rose by $2.35, or 2.85%, to $84.84 per barrel, its highest price since June 12.

The Middle East conflict intensified at the start of the week, with the United States conducting airstrikes for the ninth consecutive night. Kuwait and Bahrain reported additional Iranian attacks, and several commercial vessels were targeted in the Gulf and the Sea of Oman.

Amarpreet Singh, an analyst at Barclays Bank, noted in a memo that "the coming days and weeks will provide a clearer picture of the sustainable level of oil exports from the region." He added, "Given the current situation, we believe oil markets remain overly optimistic about the potential impacts on inventories, which, unlike the beginning of the war, have reached their lowest levels in the past five years."

In related developments, gasoline prices at US fuel stations crossed the $4 per gallon threshold on Monday. The average retail price of gasoline in the United States has increased by more than 30% since the United States and Israel initiated military actions against Iran at the end of February.

In Asian markets on Monday, the US dollar weakened, ending a three-day winning streak that began after the Middle East tensions escalated last week and amid reduced risk appetite. The US dollar index, which measures the currency’s strength against six major currencies, dropped 0.1% to 100.69 points after three consecutive days of gains against most global currencies.

The euro rose by 0.1% to $1.14 ahead of the European Central Bank meeting scheduled for Wednesday. The British pound also increased by 0.1% to $1.34, while the US dollar remained steady at 162.3 Japanese yen. The Australian dollar advanced 0.2% to 0.6996 US dollars.

The US dollar declined 0.1% against the Chinese yuan to 6.7 yuan in offshore trading, following China’s decision on Monday to keep interest rates unchanged for the fourteenth consecutive month, as expected.

Regarding cryptocurrencies, prices remained as follows:

Gold prices held steady amid investor assessment of the Middle East escalation, which pushed oil prices higher. A Federal Reserve official indicated that interest rate hikes might be necessary to curb inflationary pressures.

There is a historically inverse relationship between US interest rates and gold prices; when interest rates rise, investors tend to favor the dollar and bonds over gold, causing gold prices to decline globally.

Spot gold traded at $1,918.90 per ounce, while August gold futures increased by 0.1% to approximately $1,923.10.

Brian Lan, director at Gold Silver Central, commented that "the war is still ongoing, and with rising oil prices, inflation rates are expected to increase, which keeps gold under pressure."

Other precious metals traded as follows today: