Oil tops US$108 while bond yields hit multi-year highs amid escalating regional conflict fears
Surging crude prices and aggressive central bank moves have pushed global markets into a sharp sell-off, with the ASX posting its worst weekly decline since March.
Brent crude futures climbed to a four-month high of US$109.97 per barrel due to fears that conflict in the Middle East could expand, potentially involving attacks on Saudi oil facilities and shipping routes. Prices fell slightly to US$107.86 by mid-afternoon but remain near their peak from May. Analysts warn that West Texas Intermediate crude could retest a high of US$119.48 if tensions escalate further.
Inflation pressures are driving central banks worldwide to hike interest rates. The European Central Bank increased its policy rate by 25 basis points to 2.5 percent, raising inflation forecasts for 2027 and 2028. The Bank of Japan is scheduled to raise rates by the same margin next week, reaching 1.25 percent. Markets now price in a high probability, exceeding 70 percent, that the US Federal Reserve will also implement an aggressive rate increase next week.
The ASX 200 benchmark dropped 0.89 percent on Friday, marking its worst performance since March. Copper prices fell approximately 5 percent after reports suggested the White House is reconsidering tariffs on refined metals. Major miners including BHP and Rio Tinto declined sharply alongside other resources names including gold and lithium.
