Westpac: Oil Rebounds Sharply as Iran Holds Firm on Hormuz - FJElite

Brent rose 4.2% to around $103 a barrel and WTI gained 2.5% to $92.8, while Dated Brent traded near $120. The move followed comments from Iran’s President Pezeshkian that the Strait of Hormuz would remain closed while sanctions and the US blockade stay in place. Reports of a US diesel export ban added to the move, although the administration denied an outright ban and said it was working with refiners to voluntarily limit exports.

Strong US PMIs and hawkish Fed commentary added to the rates pressure, pushing the 2-year yield up 14bp and the 10-year up 15bp. Markets now price just under a 70% chance of an October hike, a December hike fully, and a year-end fed funds rate around 4.25%. The dollar strengthened, while the Australian dollar weakened ahead of labour data, with markets still pricing a high probability of further RBA tightening. Attention also turns to the Trump-Xi meeting, although expectations for a major breakthrough remain low.