Iran Deal Fails; Oil Prices Rise Again
Oil prices climbed again during Monday morning trading (August 10) after Iran and Oman failed to reach a final agreement to reopen the Strait of Hormuz. Brent crude rose approximately 0.8% to trade above US$84 per barrel, while WTI gained 0.6% to around US$78.67 per barrel.
The rise in oil prices followed Iran's renewed refusal to engage in direct talks with the United States and its submission of additional demands. Consequently, the market perceives the likelihood of a near-term normalization of oil and gas flows through the Strait of Hormuz as slim.
In equity markets, Asian exchanges rallied after weak US labor data drove Wall Street higher on Friday. The S&P 500 even hit a record high, as investors reasoned that a softening labor market might reduce the Federal Reserve's need to raise interest rates in the near future.
Markets now estimate the probability of a Fed rate hike in September has dropped to around 43%, down from approximately 64% a week earlier. US bond yields fell and the dollar weakened, providing a boost to Asian stocks and some regional currencies.
Market attention now shifts to this week's US inflation data. If inflation also eases, pressure on the Fed to raise interest rates could diminish further. However, rising oil prices stemming from tensions in the Strait of Hormuz remain a risk, as they could once again drive up energy-related inflation.
Newsmaker Analysis: The market is currently navigating two opposing sentiments. Weak Non-Farm Payroll (NFP) data supports stocks and gold by lowering expectations for interest rate hikes, yet the failure to secure the Hormuz deal keeps oil prices elevated. If the conflict persists, Brent prices could remain above US$80, and inflation risks might once again weigh on market sentiment. (asd)*
Source: Newsmaker.id
