What happened
Brent crude jumped 12% to over US$108 per barrel after Iran-backed Houthi forces seized Mocha and targeted Red Sea shipping routes used by Saudi Arabia. The conflict caused European gas prices to rise up to 15%, while the ASX 200 fell 2.94% to 8,741.2 points.
Why it matters here
Higher fuel and energy costs feed directly into transport and production expenses across the Australian economy. This escalation amplifies underlying inflation, forcing traders to price in a 70% probability of a September rate hike and driving Australia's 3-year government bond yield to a 15-year high above 5%.
What to watch
Monitoring regional Middle East shipping developments in the Strait of Bab el-Mandeb alongside upcoming weekly global crude inventory reports for further energy market price signals.
Source
fool.com.au