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GLOBAL oil prices remained elevated on Thursday after a sharp rally in the previous session, as renewed military tensions between the United States and Iran intensified concerns over potential disruptions to energy supplies from the Middle East.
West Texas Intermediate (WTI) crude held above US$84 per barrel after gaining more than 6 per cent in the previous session, while Brent crude stayed above US$90 per barrel after advancing more than 8 per cent.
The rally followed renewed hostilities between Washington and Tehran, with US President Donald Trump pledging a strong response after an attack on American forces in Jordan.
Market concerns were further heightened as diplomatic efforts between the two sides showed little progress, with Iran continuing to insist on maintaining control over the Strait of Hormuz, a key global oil transit route.
The conflict has also widened beyond the Strait of Hormuz into the Red Sea, where Iran-backed Houthi rebels in Yemen threatened to blockade Saudi Arabia.
The escalation prompted Riyadh to join US forces in conducting strikes against targets in Iraq linked to Tehran-backed militants, deepening concerns over a broader regional conflict.
Oil prices received additional support from tightening supply indicators in the United States, where commercial crude inventories recorded their largest decline since mid-June.
The US Strategic Petroleum Reserve also fell for an 18th consecutive week, reaching its lowest level since 1983.
Meanwhile, the US dollar strengthened in Asian trading after the Federal Reserve kept its benchmark interest rate unchanged, with Chair Kevin Warsh providing limited clarity on how divisions among policymakers would affect future decisions.
Reuters reported that the dollar index, which measures the greenback against six major currencies, rose 0.1 per cent to 100.89 after the United States confirmed it was carrying out air strikes in Iran.
The British pound weakened 0.1 per cent to US$1.3355 ahead of the Bank of England’s interest rate decision, with markets largely expecting policymakers to maintain the current rate.
The euro slipped 0.1 per cent to US$1.1457, while the Australian dollar and New Zealand dollar were little changed at US$0.6959 and US$0.5795 respectively.
The yen remained steady at 163.455 per US dollar.
Geopolitical developments helped the dollar recover from earlier weakness after it fell to its lowest level since July 20 following the Federal Reserve’s policy announcement.
"Despite three committee dissents in favour of a July hike, Chair Warsh stopped short of flagging an imminent hike, echoing June's tone," said IG market analyst Fabien Yip in Sydney.
"That is starting to unsettle investors: a Fed unwilling to commit to further tightening raises the question of whether it can keep long-term inflation expectations anchored."
US Treasury markets reacted sharply following the Fed decision, with the yield on the 30-year Treasury bond climbing to its highest level in nearly two decades.
Data from CME Group’s FedWatch tool showed that futures markets were pricing in a 42.6 per cent probability that the Federal Reserve would hold interest rates steady at its next two-day meeting ending on September 16, compared with 24 per cent before the latest policy announcement.
"We continue to expect the Fed to remain on hold, but we have concerns that markets may react badly down the road to a perception that it is not moving when it should," said Steve Englander, global head of G10 FX research at Standard Chartered in New York.
"There was considerable commentary by market participants on the vagueness of his answers to questions that in the past would have been answered directly."
In cryptocurrency markets, Bitcoin rose 0.3 per cent to US$63,650.06, while Ether gained 0.7 per cent to US$1,896.66. - July 30, 2026
