Oil prices rose early in Asian trade Wednesday as the escalating conflict in the Middle East amplified fears of supply disruptions in the region.
The U.S. destroyed five Iranian oil tankers on Tuesday in response to fresh attempts by Iran to strike U.S. warships in the Middle East in recent days, The Wall Street Journal reported, citing U.S. Central Command. Since Friday, Iran has fired ballistic missiles at a U.S. aircraft carrier, a destroyer and at least one Marine ship, according to U.S. officials familiar with the attacks.
Iran-backed Houthi militants in Yemen also fired drones and missiles at a number of Saudi Arabia's southern energy facilities on Tuesday. Saudi Arabia confirmed the attacks, which the Houthis said targeted facilities in Abha, Najran and Jazan. The strikes hit gas and oil storage facilities including at a power plant in Abha and left the major refinery at Jazan aflame and off line, The WSJ reported, citing people familiar with the damage.
"The recent escalation in attacks has weighed on oil flows from the Persian Gulf," ANZ Research analysts said in a research report. "OPEC's crude oil production tumbled in August, according to a Bloomberg survey," the analysts said. "Supplies from the producer group declined by" 900,000 barrels per day to average 19.91 million barrels per day, the analysts added.
Front-month Brent crude oil futures rose 1.4% to $99.31 per barrel, near the psychologically important $100.00-per barrel level, according to ICE data. Front-month West Texas Intermediate advanced 1.6% to $94.51 a barrel.
The yen continued to strengthen against the dollar and other currencies amid rising prospects of a swifter pace of interest-rate increases by the Bank of Japan.
"Odds for a September hike over the past month have jumped from around 65% to 98%, and an additional hike by December is now nearly priced in," said Adam Turnquist, chief technical strategist for LPL Financial, in an email. Japan's "better-than-expected GDP, rising inflation, and wage growth near 30-year highs have underpinned the hawkish repricing," Turnquist said.
The U.S. dollar declined 0.2% to 153.62 yen after hitting 152.87 yen on Tuesday, its lowest intraday level since Feb. 17, LSEG data showed. The Australian dollar edged 0.2% lower to Y110.90 and the euro was 0.2% lower at Y178.65.
Equity markets across the Asia-Pacific region were mostly higher. South Korea's Kospi rose 1.2%, Japan's Nikkei Stock Average gained 0.6%, and Malaysia's FTSE Bursa Malaysia KLCI edged 0.1% higher. Meanwhile, Singapore's FTSE Straits Times Index fell 0.3%.
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