Brent crude jumped more than 4 percent back past $104 a barrel on Thursday, its biggest one-day move in a month, as tanker attacks mounted in the Strait of Hormuz and a hurricane forced US offshore producers to shut in platforms. The move spilled straight into bonds and stocks: the 10-year Treasury yield climbed back above 5.3 percent and European shares slid to their lowest level since June.
The fresh attack in the Persian Gulf came the same day President Donald Trump said he does not want to reach a deal with Iran to end the war, according to the Wall Street Journal’s live coverage. Bloomberg’s tally of Gulf shipping incidents shows tanker attacks this month at their highest level since the war began eight months ago. IG chief market analyst Chris Beauchamp said an Axios report that Washington is preparing to resume major combat operations, together with the pending US storm, was keeping prices above $100, adding that investors “can’t discount the possibility of a new round of strikes.”
Hurricane shuts US Gulf production
Supply tightened from a second direction. Shell and Chevron said Wednesday they were curtailing offshore operations as Hurricane Isaias moved toward production areas in the Gulf of Mexico. The Bureau of Safety and Environmental Enforcement’s Marine Minerals Administration reported about 25.08 percent of current US Gulf oil production and 16.37 percent of natural gas output shut in as of Wednesday. The United States is the world’s biggest oil producer, so those barrels matter even before any escalation.
Inventory data helped the bid as well. US crude stockpiles fell 3.186 million barrels in the week to October 2, against expectations of a build, while diesel inventories slipped slightly, the Energy Information Administration reported.
| Contract | Thursday level | Move |
|---|---|---|
| Brent crude | $102.28 to $104 | +4.13 percent |
| WTI crude | $91.99 | +4.2 percent |
| US 10-year yield | 5.33 percent | up, near 24-year peak of 5.36 percent |
Bonds under pressure in Europe
The oil push aggravated a bond selloff already running across the euro area. Investors sold French sovereign debt and the pressure spread to Italian and Greek bonds and to banking stocks, with the STOXX 600 down nearly 1 percent to levels last seen in June. European banks fell almost 2 percent, with Deutsche Bank, Banco Santander, Societe Generale and UniCredit lower for a second day as euro zone yields climbed back toward recent peaks.
A trio of European Central Bank policymakers issued fresh inflation warnings, and markets will parse the ECB’s latest meeting accounts on Thursday for clues on the policy outlook. The tension is familiar: higher energy prices feed inflation, which keeps rates high, which hurts the heavily indebted sovereigns most.
Fed minutes frame the rate path
Minutes of the Federal Reserve’s September meeting, released Wednesday, showed a unanimous first hike since July 2023 to 3.75-4 percent, with divisions over the rationale: some participants saw the move as insurance against energy price shocks, others as a response to demand-driven inflation. Most members now consider another hike likely by year-end, while approaching each meeting with an open mind.
Markets price an October move at roughly 16 to 19 percent and a December hike near 80 percent, per CME FedWatch. Governor Christopher Waller said additional tightening may be needed to hit the 2 percent target but emphasized flexibility on pace, language widely read as a probable October pause. Goldman Sachs expects the second hike in December but sees a significant chance the Fed stops there.
Stocks and Asia
Wall Street futures fell in early Thursday trade: Dow e-minis off about 0.78 percent, S&P 500 e-minis down 0.4 percent and Nasdaq 100 e-minis 0.57 percent lower. On Wednesday the S&P 500 and Nasdaq had already dropped from record highs set Tuesday, when chip-driven AI buying pushed Nvidia toward a $6 trillion market value. Bank of America and Citigroup lost about 1 percent, and Intel and Marvell each slid more than 2 percent.
Japan’s Nikkei fell 1.4 percent and South Korea’s market lost 2.6 percent. In India, the central bank hiked rates for the first time in more than three years, and the rupee steadied after an initial slide.
Shipments through the Strait of Hormuz carried about 20 percent of the world’s oil and fuel before the war, so escalation risk keeps a floor under prices even after Wednesday’s brief relief, when the International Energy Agency agreed to speed up and prioritize the release of strategic diesel stocks. G7 members had already agreed on Friday to release 100 million barrels of diesel and crude. US Secretary of State Marco Rubio, meanwhile, repeated the administration’s position that Washington controls the strait and flows are close to normal.
MST Marquee’s head of energy, Saul Kavonic, put the case plainly: “The frequency of Iranian attacks on ships is now at the highest point since the war began, and likely to intensify further.” Constrained product flows and extreme logistics costs, he said, are keeping prices elevated whether or not reserved barrels reach the market.
For traders, the path of least resistance now depends on two unrelated things: whether the US strike question stays in the report stage, and whether Waller’s flexible Fed pauses in October as priced. Until one of those clears, energy-driven inflation remains the story every other asset is trading against.