Oil prices rise due to US strikes: US strikes on Yemen led to a rise in oil prices, as tensions continue in the Middle East.

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U.S. dollar

The reasons

European Central Bank

Oil rises due to US strikes on Yemen

Oil prices rose as a new wave of strikes launched by the United States against Houthi targets in Yemen
perpetuated tensions in the Middle East and raised the possibility of long-term disruptions in global shipping patterns.

The global benchmark Brent crude oil exceeded $78 a barrel after closing lower yesterday, Wednesday,
while West Texas Intermediate crude approached $73.
US Central Command said the United States bombed more than a dozen Houthi missile launchers in response to the Iranian-backed group’s attacks on ships.

The crisis in Yemen has cut off transit operations through the Red Sea and Suez Canal,
disrupting trade flows, with ships avoiding the region and taking longer alternative routes.
The Biden administration returned the group to the terrorist list.
The Houthis say they are working to support Hamas in its fight against Israel.

Crude oil was hit hard in the first weeks of the year due to the escalating crisis in the Middle East,
in addition to fears that the Federal Reserve will start cutting interest rates later than expected.

In one sign that the global crude oil market may be tightening, the spot spread for West Texas Intermediate crude –

a widely watched measure of near-term supply and demand conditions – turned into a “backorder” state, for the first time since November.

Gao Jian, an analyst at Shandong-based Qixing Futures, said that if the current situation in the Red Sea extends,

there could be a short-term jump in prices, even though weak fundamentals have constrained oil since late last year.

At the same time, the industry-backed American Petroleum Institute reported a slight increase in US crude oil inventories nationwide,
although there was a decline in the main hub in Cushing, Oklahoma.

At the same time, data indicated an increase in gasoline and distillate stocks. Official data is scheduled to be released later on Thursday.

The US dollar has achieved its longest series of increases since last August

The US dollar continued its upward path for the fifth session in a row, today, Wednesday,
achieving the longest series of daily gains since late last August,
supported by the strong rise in US Treasury bond yields and the increasing possibility of keeping federal interest rates at high levels for a longer period.

The reasons

Positive US retail sales and industrial production data for December

Retail sales in the United States witnessed a clear growth last December by 0.6% compared to the previous reading in November,
which stabilized at 0.3%, reflecting the recovery in demand in the country and, consequently, the strength of economic conditions.

Official data also revealed that US industrial production grew by 0.1% last December,
while market expectations indicated a contraction in the index by 0.1% after the index recorded stability at zero levels the previous November.
This indicates the strength of US industrial activity and its Positive repercussions on the country’s economic growth,
and consequently, the dollar rose strongly in today’s transactions.

These positive data supported the Fed’s position to maintain high-interest rates for a longer period, long enough to declare its victory over inflation.
In other words, the markets seem to believe that the central bank will not rush to lower interest rates,
this was confirmed by US Federal Reserve member Waller in his statements issued last Tuesday.

which indicated that the bank is not thinking about reducing interest rates in the near term,
which reflected positively on the movements of the US dollar in the end.

US Treasury yields rise

The clear rise in US Treasury bond yields of various terms led to a recovery in demand for the US dollar in trading.
Looking at today’s transactions, we find that the 10-year US Treasury bond yield rose by 0.82% to a record 4.100%.
At the same time, the 20-year US Treasury bond yield recorded a record.

An increase of approximately 0.34% to 4.437% coincided with a rise in the yield of 30-year US Treasury bonds by approximately 0.20% to 4.313%.

European Central Bank

Supply chain disruptions are one of the top risks to European Central Bank President Christine Lagarde’s

mind as she considers other consequential risks of a resurgence in inflation.

“The things I’m watching carefully are wage negotiations, profit margins, and energy prices,”
Lagarde told Francine Lacqua, during an event held at Bloomberg House in Davos on Wednesday.
“I hope that what I fear will not happen, but supply bottlenecks will come back again.

These are four main components that can “It could have a serious impact on our efforts to combat inflation.”

Other ECB monetary policymakers, including Robert Holzmann,
also viewed the Red Sea developments as a potential threat to consumer prices.

Monetary policymakers have reasons to be concerned. Supply chain disruptions that began during the pandemic were,
in part, behind the initial bout of inflation that occurred before energy prices rose in the wake of Russia’s invasion of Ukraine.

Global trade faces a major challenge in the Red Sea, where the Iran-backed Houthi group
has escalated its attacks against commercial ships over the past months.
comes as the West tries to deter the development of events and avoid conflict Wider awareness of the Middle East,
a region already tense due to the war between Israel and Hamas.

Oil prices rise due to US strikes

Oil prices rise due to US strikes

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