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GLOBAL oil prices surged to multi-month highs on Friday as intensifying conflict in the Middle East heightened fears of widespread supply disruptions, sending Brent crude above US$100 per barrel and reinforcing demand for the US dollar as investors sought safe-haven assets.
Brent crude was trading at US$100.69 per barrel, while West Texas Intermediate (WTI) stood at US$92.22, leaving both benchmarks on course for weekly gains exceeding 12%.
The rally followed remarks by United States President Donald Trump, who warned that Washington was prepared to impose "major military punishment" on Iran and the Iran-backed Houthi movement in response to any further attacks on shipping in the Red Sea. Trump also said he was considering launching a "massive attack" on Iran.
The heightened rhetoric came after Houthi militants attacked two Saudi oil tankers in the Red Sea, intensifying concerns over the security of one of the region's key export routes as disruptions to shipping through the Strait of Hormuz continue.
The deteriorating security environment has prompted Asian refiners and buyers to discuss rerouting Saudi crude cargoes through the Suez Canal and around the Cape of Good Hope to minimise supply risks.
Supply concerns were compounded after the Caspian Pipeline Consortium suspended crude loadings at its Black Sea export terminal following tanker attacks, affecting a route responsible for transporting around 80% of Kazakhstan's oil exports.
Meanwhile, geopolitical tensions escalated further as the United States launched a 13th consecutive day of military strikes against Iran, with both Washington and Tehran showing little sign of returning to negotiations.
The worsening conflict has also strengthened demand for the US dollar, traditionally regarded as a safe-haven currency during periods of heightened geopolitical uncertainty.
The US Dollar Index (DXY) climbed above 101.40 after robust labour market data reinforced expectations that the Federal Reserve would maintain a restrictive monetary policy stance.
Initial jobless claims fell to 187,000 in the week ended July 18, substantially below market expectations of 212,000 and the previous week's revised figure of 209,000, marking the lowest reading since 1969.
The stronger-than-expected employment data, combined with surging oil prices, has prompted investors to reassess the outlook for US interest rates amid concerns that higher energy costs could reignite inflation.
Markets are now pricing in more than a 33% probability of a Federal Reserve interest rate increase at next week's policy meeting, while expectations of a further rate hike in September have risen to above 78%, compared with 61% a day earlier.
In currency markets, the euro weakened after the European Central Bank left its key interest rates unchanged, in line with expectations, while reiterating that future policy decisions would remain data dependent.
Sterling also retreated against the stronger US dollar as investors adopted a cautious stance ahead of the United Kingdom's June retail sales data, which is expected to show softer consumer spending.
The Japanese yen fell to its weakest level in almost four decades against the US dollar as rising US Treasury yields and widening monetary policy divergence between the Federal Reserve and the Bank of Japan continued to favour the greenback, fuelling renewed speculation that Japanese authorities could intervene in currency markets.
With crude oil prices now trading roughly 31% above levels recorded before the latest escalation in hostilities, investors remain increasingly concerned that sustained increases in energy costs could feed into broader inflationary pressures and complicate the policy outlook for central banks around the world. - July 24, 2026
