Brent Crude Rises 0.5% as Israel-Hezbollah Clashes Escalate
Summary
- Oil prices rose as clashes between Israel and Hezbollah intensified and the prospect of additional US sanctions on Iran came into focus.
- Brent crude, the global oil benchmark, rose 0.5% in early Asian trading, underscoring how geopolitical uncertainty is fueling concerns over oil supply.
- US stocks weakened on deteriorating consumer sentiment and falling retail sales, while the dollar fell to its lowest level since May as expectations for a September rate hike by the Federal Reserve eased.
Forecast Trend Report by Period
Oil prices rose as clashes between Israel and Hezbollah intensified and the prospect of additional US sanctions on Iran added to market tension.
Brent, the global crude benchmark, gained 0.5% in early Asian trading on August 16, Bloomberg reported. The advance reflected rising geopolitical uncertainty over oil supplies as fighting flared again between Israel and the Lebanon-based militant group Hezbollah.
Israel said on August 15 that it killed 11 people, including a senior Hezbollah commander, in an airstrike in southern Lebanon. It was the deadliest strike since the two sides agreed to a ceasefire in early June.
Prime Minister Benjamin Netanyahu said the attack was retaliation after three Israeli soldiers were wounded in an earlier Hezbollah strike.
The latest violence could further complicate already stalled talks between the US and Iran. A ceasefire agreement between the two countries is set to expire later on August 16, but there has been no breakthrough on reopening the Strait of Hormuz, a central sticking point.
Tensions are also rising on signs that Washington is preparing additional economic pressure on Iran. The US is preparing what has been described as an "economic isolation" plan aimed at increasing pressure on Tehran.
"The biggest headwind for markets right now is still geopolitical uncertainty," Kyle Rodda, a senior analyst at Capital.com, said. While volatility has eased somewhat as military activity in the Middle East has moderated, geopolitical risks continue to weigh on sentiment, he added.
US stocks closed lower on August 14. Shares retreated from record highs after consumer sentiment weakened more than expected and retail sales posted their biggest decline in more than a year. The S&P 500 fell 0.2%, while S&P 500 futures were little changed in Asian trading on August 16.
The dollar was little changed against major currencies. It had earlier fallen to its lowest level since May as weak US consumer data reduced expectations for a Federal Reserve rate increase in September.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.