Oil Prices Rise for the Second Consecutive Day Amid Middle East Supply Concerns
A pipeline outage in Saudi Arabia and regional supply worries drive oil prices higher, while bond yields and interest rate expectations take shape in global markets.
Oil prices recorded gains for the second consecutive day due to the shutdown of a critical pipeline in Saudi Arabia and supply concerns in the Middle East. The barrel price of Brent crude exceeded $108, approaching its highest levels seen since May.
Oil Prices Continue to Rise
The ongoing outage of a critical oil pipeline in Saudi Arabia continues to heighten investors' supply concerns. After surging above $109.2 the previous day and then dropping to $105.6, the barrel price of Brent crude climbed back above $108 yesterday.
Highest Levels Since May
Recording a 2.35 percent increase during the day, Brent crude reached $108.16. With this development, prices moved toward their intraday peak below $110, which marks the highest level recorded since May.
Assessments by Goldman Sachs Analysts
In a note published by Goldman Sachs analysts, attention was drawn to the uncertainty created by the war on oil prices. The analysts emphasized that the duration of the disruptions remains uncertain and continues to affect the markets.
Fed Interest Rate Expectations and Inflation
Rising oil prices have strengthened expectations that the US Federal Reserve will raise interest rates this week. The Fed's two-day interest rate decision meeting began yesterday, and the markets are closely monitoring this process.
Decline in Gold Prices
As rate hikes were priced in alongside rising inflationary concerns, non-yielding gold lost value. Spot gold dropped below $4,300 yesterday to $4,261.56, while domestic gram gold traded down 0.62 percent around 6,680 TRY.
Peak in US 10-Year Treasury Yields
The rapid increase in oil prices, which heightened concerns regarding inflationary pressures, pushed US 10-year Treasury yields to a 19-year high. The yield on the US 10-year Treasury note hit 5.02 percent, marking the highest level reached since 2007.