Why are oil prices up today?

Oil prices are rising again on Monday. The worst hit are US stock market and bullion prices. In the morning, Brent crude reached $101 per barrel. US crude oil futures has also risen by about 2%. The oil prices are touching sky after US President Donald Trump rejected an Iran peace proposal to resolve the Middle East conflict and reopen the Strait of Hormuz. The tensions have risen in the Middle East region.

Oil price hike effect

The S&P 500 has fallen by 0.4%, Dow Jones Industrial Average has declined by 274 points, or 0.5%, and the Nasdaq composite is also down by 0.5%, as of 10 a.m. Eastern time. The downfall of the US stock markets was triggered by 1.5% rise for the most actively traded contract in the market for Brent crude oil to $98.92 per barrel.


The higher oil prices have stoked inflation fears and led to the downfall of bullion prices. It has also bolstered the case for elevated interest rates. The gold has also reached its lowest in over seven weeks. The spot gold is down by 3.1% to $4,155.67 per ounce. As of 1031 GMT, spot silver fell 4.6% to $61.32 per ounce. The platinum has lost 2.4% to reach $1,735.95 and palladium declined by 3.4% to touch $1,224.39.

Giovanni Staunovo, analyst, UBS, said, "Higher oil prices and the increased probability of further US rate hikes being priced in by market participants are the main drivers behind gold's recent weakness. This backdrop could keep US real yields and the US dollar elevated, raising the opportunity cost of holding non-yielding gold and contributing to further near-term volatility in the precious metal."

According to AAA, the inflation has also worsened since the Middle East war started as the average price for a gallon of regular gasoline has increased to nearly $4.48 from $3.13 a year ago.

Why are oil prices up today?

Lawrence Gillum, chief, fixed income strategist, LPL Financial, said, "Oil prices are up again after the Middle East ceasefire offer was rejected by Trump. There's likely going to continue to be upward pressure on bond yields as long as the Iran conflict uncertainty is out there. Higher oil prices are going to lead into future inflation reports. Markets are pricing in a Fed hiking campaign over the next 12 months."