Crude prices rise above $90 per barrel, US stocks dip on Iran strikes

Oil prices jumped more than two percent Monday, with the Brent international benchmark rising above $90 a barrel after a fresh flare-up in the US-Iran war. Meanwhile, stocks on Wall Street dipped and were mixed elsewhere as investors continued to react to hawkish comments from Federal Reserve chief Kevin Warsh. After a run lower for most of last week, oil price 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.

The attack prompted Tehran to retaliate by hitting US military targets in Jordan. President Donald Trump said Monday that the United States would hit back against Iranian attacks on US targets in the Middle East, according to Fox News. The exchange came shortly after the US-Iran war hit the six-month mark, and at a time when hostilities had been subsiding.

The news revived concerns about the conflict in the Gulf, with attempts at peace talks appearing to be going nowhere and the Hormuz strait — through which a fifth of global crude and gas normally passes — largely closed. “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.

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 left traders with few doubts that he was ready to increase borrowing costs. He called the spike in inflation — currently at 3.7 percent and nearly double the Fed’s two-percent target — “concerning” and said he would be “hard-pressed” to describe current financial conditions as “restrictive”, largely taken as a hint that rate hikes were on the horizon.

However he stopped short of saying he would support a hike, adding: “I stand here today committed to a discipline, n…