Brent climbs 3% as Asia stocks slide before Fed, BOJ decisions

  • Oil prices rose as supply threats weighed on Asian share markets.
  • Brent futures gained 3.1% to $107.84 a barrel after rising almost 9% last week.
  • Markets priced an 86% chance of a 25-basis-point Federal Reserve hike Wednesday.

Asian share markets fell on Monday as renewed supply concerns lifted Brent by 3.1% to $107.84 a barrel, while investors prepared for possible interest-rate increases by the Federal Reserve and Bank of Japan. New strikes on Saudi Arabia and ships in the Gulf followed an attack on a Saudi oil pipeline and an advance by Yemen’s Houthis, raising concern that wartime disruption to global energy supplies could deepen. A planned Oman meeting between Iran and Gulf Arab states on opening the Strait of Hormuz was postponed. Threats to shipping through Hormuz and the Bab el-Mandeb have heightened fears that oil prices could remain elevated and add to global inflation. Markets priced an 86% chance of a 25-basis-point Federal Reserve hike on Wednesday and another increase by December, which would be the first hike since mid-2023. Markets also implied a 76% chance that the Bank of Japan would raise its cash rate by a quarter point to 1.25% on Friday. Higher bond yields have tested equity valuations, although Goldman Sachs said strong corporate earnings could support Wall Street if borrowing costs rise.

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