Oil prices jumped more than 2% on Monday, with the Brent international benchmark rising above $90 a barrel after a fresh flare-up in the US-Iran war. In equity trading, Wall Street and Europe's main markets dipped as investors continued to react to hawkish comments from Federal Reserve chief Kevin Warsh. After a run lower for most of last week, oil prices spiked again Monday, a day after the United States said it had attacked Iranian rocket launchers on a small island in the Strait of Hormuz, its first strikes on the country in a month. Tehran retaliated by launching missiles at US military targets in Jordan. President Donald Trump said Monday that the United States would hit back against the Iranian strikes, according to Fox News.
The exchange came shortly after the US-Iran war hit the six-month mark, and with hostilities subsiding until the weekend's flare-up. "For oil traders, the move is another reminder of how quickly the geopolitical premium can return," said Quintex Intel's Stephen Innes. "Physical flows through Hormuz have improved materially from their worst levels, which is precisely why crude had started giving back some of the fear premium, but the latest exchange shows how fragile that progress remains and how quickly the shipping story can be pushed back onto the trading desk," he added.
Trump will be meeting oil refining executives on Tuesday in a bid to tame soaring US domestic petrol prices that have been a political headache for his Republican Party heading into upcoming midterm elections. With inflation remaining stubbornly high -- largely on the back of elevated energy costs -- the US Federal Reserve has come under pressure to act, with Warsh's refusal to provide guidance stoking uncertainty in recent weeks. But in a highly anticipated speech at the Jackson Hole symposium of central bankers and economists in Wyoming on Friday, Warsh gave his strongest signal yet that rate hikes were likely coming -- and soon.
All three main indexes on Wall Street fell fell further on Monday, with the Dow losing 0.7% at the close. More key US data is due this week, with job market metrics to be released Friday -- any strength in the employment numbers will likely mean the Fed will be free to focus on the inflation side of its mandate. Asian stock markets struggled in the morning, but some markets rallied as the day progressed, leaving some in positive territory and others just below Friday's close. In Europe, Paris rose, but Frankfurt dipped, while London was closed for a holiday.