Brent crude climbed to almost $107 per barrel on Monday after Yemen’s Iran-backed Houthi movement carried out strikes on Saudi Arabia, deepening concerns over tight global supplies as the northern hemisphere heads into winter.
Investors were further unsettled by doubts over United States President Donald Trump’s claim of an “energy ceasefire” between Ukraine and Russia, which followed his surprise announcement of a deal to buy diesel from Moscow.
Stocks had a mixed day in Asia, but Europe’s main indices gained in afternoon trading, with the car sector boosted by a deal to limit Chinese imports of hybrids as part of efforts to avoid a trade war.
On Wall Street, the main indices opened mixed, and the tech-heavy Nasdaq Composite dipped after hitting record highs last week.
The dollar strengthened against most currencies ahead of key US inflation data due this week. Investors will read the figures for signs of whether the Federal Reserve could be pushed to raise interest rates again to tame elevated inflation.
Neil Wilson, a strategist at Saxo UK, said: “Oil remains well bid above $100 after strikes on Saudi Arabia’s Riyadh airport over the weekend, whilst efforts to secure a Russia-Ukraine energy truce were muddy.”
Wilson added that “a US deal to purchase some Russian diesel is a drop in the ocean”.
Russia on Monday declined to say whether it had reached an agreement with Ukraine to stop attacks on energy infrastructure. This came a day after Trump caused confusion by unilaterally announcing an “energy ceasefire”.
Trump also called for Ukraine to “get a new leader” after Volodymyr Zelensky criticised Washington’s easing of sanctions on Russian diesel. The US president is grappling with high fuel prices ahead of midterm elections in the world’s biggest economy.
Meanwhile, Saudi Arabia’s energy minister acknowledged that the kingdom’s infrastructure and resilience had been tested by a wave of deadly attacks by Yemen’s Houthis.
The weekend strikes marked a sharp escalation in the Yemen war, in which Saudi Arabia has long backed the internationally recognised government.
The start of the corporate earnings season is also in view this week, with US banking giants JP Morgan, Goldman Sachs and Bank of America due to report on Tuesday.
Tech giants will report later in October and November. Traders are keen to gauge the outlook for the AI sector, which is investing vast sums despite growing concerns over the technology.
eToro US investment analyst Bret Kenwell said: “Rising Treasury yields, higher interest rates and persistent inflation are raising the bar for companies to deliver strong results.”
He added: “Banks and credit card companies will offer an important read on household finances, particularly as inflation continues to outpace wage growth.”
Investors will also study results from tech firms to measure the durability of the AI investment cycle.
According to Kenwell, analysts are expecting earnings growth of 24.4 per cent and revenue growth of 16.5 per cent for this quarter.
Key figures at around 1330 GMT
Brent North Sea crude: up 2.0 per cent at $106.83 per barrel
West Texas Intermediate: up 1.8 per cent at $93.54 per barrel
New York, Dow: up 0.2 per cent at 51,743.40 points
New York, S&P 500: up less than 0.1 per cent at 7,814.80
New York, Nasdaq Composite: down less than 0.1 per cent at 27,350.29
London, FTSE 100: up 0.8 per cent at 10,631.00
Paris, CAC 40: up 0.2 per cent at 7,820.75
Frankfurt, DAX: up 0.7 per cent at 25,262.89
Hong Kong, Hang Seng Index: up 0.3 per cent at 24,271.20 (close)
Shanghai, Composite: down 0.4 per cent at 3,794.60 (close)
Tokyo, Nikkei 225: closed for a holiday
Euro/dollar: down at $1.1181 from $1.1203 on Friday
Pound/dollar: down at $1.3231 from $1.3240
Dollar/yen: up at 158.62 yen from 158.27 yen
Euro/pound: down at 84.48 pence from 84.62 pence
