EconomyCommodities
Brent tops $113 for the first time since May as gold slides to a two-month low
Attacks in Saudi Arabia and a report of planned strikes on Iran sent oil sharply higher on Thursday. Gold and silver fell as traders bet dearer energy would keep interest rates high.
Key points
- Brent crude climbed above $113 a barrel, its highest level since May.
- US crude rose to about $100, also a high not seen since May.
- Gold fell about 2.1% to $4,061 an ounce and silver 4.5%.
Oil prices jumped on Thursday, with Brent crude rising above $113 a barrel for the first time since May, as attacks on Saudi Arabia and fresh signs of a wider conflict with Iran rattled a market already short of supply.
US West Texas Intermediate crude climbed to about $100 a barrel, also its highest since May. Brent has now risen by more than half since the war with Iran began in late February.
Two developments drove the move. Saudi Arabia reported attacks on the airport at Dammam and on an Aramco oil field, the latest in a series of strikes by Yemen’s Houthi rebels on the kingdom. A New York Times report that the United States and Israel had drawn up plans for renewed strikes on Iran after the 3 November US midterm elections added to fears of a longer disruption. President Donald Trump also denied that Washington was in talks with Tehran.
“Brent crude surged 3 per cent following attacks on Saudi Aramco’s oilfield,” said Sunny Aggrawal, head of fundamental research at SBI Securities.
Gold loses its shine
Precious metals moved the other way. Gold fell about 2.1% to around $4,061 an ounce, its lowest in more than two months, and silver dropped about 4.5% to near $55. Traders reasoned that a lasting oil shock would push up inflation and keep central banks from cutting interest rates, which hurts metals that pay no interest.
The cost for India
India imports most of its crude, and each rise in Brent widens its import bill and adds to inflation, which reached 5.54% in September. The rupee fell 44 paise to 94.82 to the dollar on Thursday, and dealers warned that a move in crude towards $120 could push it lower still.