Oil prices remained elevated despite a slight pullback, as markets reacted to renewed threats by US President Donald Trump to resume military strikes on Iran should Tehran reject Washington’s peace terms.
Image: Facebook/The White House
Brent crude hovered above $110 a barrel on Wednesday as escalating tensions between the United States and Iran continued to fuel fears of prolonged supply disruptions in the Middle East, while the rand weakened against a resurgent dollar and gold prices retreated amid rising interest rate concerns.
Oil prices remained elevated despite a slight pullback, as markets reacted to renewed threats by US President Donald Trump to resume military strikes on Iran should Tehran reject Washington’s peace terms.
The conflict, now in its 12th week, has effectively shut down the strategic Strait of Hormuz, a key shipping route for global oil supplies.
The closure of the waterway has intensified inflation fears globally, with investors increasingly concerned that sustained high energy prices could force central banks to maintain higher interest rates for longer.
Bianca Botes, managing director at Citadel Global, said markets continued to swing between risk-on and risk-off sentiment as geopolitical uncertainty dominated trading activity.
She noted that Brent crude remained above $110 per barrel even after easing marginally, while the dollar climbed to a six-week high as investors repositioned for a potentially more aggressive global interest rate environment.
The stronger dollar weighed on the rand, which weakened to around R16.70 against the greenback after shedding 0.3% overnight. The local currency has now lost 1.2% against the dollar over the past week.
Andre Cilliers, currency strategist at TreasuryONE, said the rand was showing resilience despite mounting pressure from rising US Treasury yields and a stronger dollar.
However, he warned that a break above R16.80/$ could open the path toward R17.00 as markets brace for South Africa’s latest inflation data and next week’s South African Reserve Bank interest rate decision.
Meanwhile, gold prices softened to around $4,470 an ounce as investors shifted toward the dollar for safe-haven protection. Higher bond yields and expectations of further rate hikes reduced the appeal of non-yielding assets such as bullion.
Other precious and industrial metals, including platinum, palladium and copper, also traded lower as concerns over slowing global economic growth weighed on commodity markets.
BUSINESS REPORT