Oil Tops $116 as Middle East Attacks Push Markets Lower

Overview

• Brent futures jumped to about $116–117 per barrel on Friday after a more than $3 intraday rise, marking the highest level since April and reversing recent calm in oil markets.
• Price pressure followed a run of incidents including Houthi strikes on Saudi energy sites, reports that the tanker Gem No. 2 was hit, and an oil spill detected off Umm Al Quwain, each increasing the risk of physical disruption to exports and shipping routes.
• Media reporting that the White House and Israel prepared contingency plans involving Iran heightened investor caution by raising the prospect of a wider military escalation that could further threaten Gulf flows.
• Global investors moved toward safer assets and sold stocks as a result: U.S. and European indices closed lower with the Dow falling about 1.2%, while Brazilian markets diverged as the Ibovespa rose and the real strengthened below R$5 on polling that lifted Senator Flávio Bolsonaro’s chances.
• Markets will watch two key risks next: any fresh Middle East incidents that could disrupt supply through chokepoints such as the Strait of Hormuz and Bab el-Mandeb, and the Federal Reserve’s policy decision next week because higher oil can boost inflation and influence U.S. interest-rate outlooks.