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News
Monday, August 31, 2026
What’s happening: Crude oil prices rose this morning, sending Brent close to the $90 resistance level.
What happened: US forces attacked two rocket launchers on Iran’s Larak island in the Strait of Hormuz.
Reports of US sanctions on Iran targeting a much broader shipping network also lifted oil prices this morning.
Why it matters: The latest attack by the US was the first in over a month, as the US shifted its attention to sanctions to pressure Iran for a deal.
The US Treasury said that the sanctions target a “network of brokers, companies, and shadow fleet vessels” operating across the Hong Kong, China, Singapore, Switzerland and Europe that transport Iranian oil and channel revenue to Iran’s Revolutionary Guard.
China buys more than 80% of Iran’s seaborne oil exports, so sanctions on Chinese-linked networks are seen as far more consequential for actual crude flows, since Tehran has weathered direct US sanctions for nearly five decades.
Iran retaliated to the latest attack by striking two US air bases in Jordan. Iran warned of “even more devastating responses” in case the US continued its offensive.
Meanwhile, approximately 6-8 million barrels of crude are still transiting through the Strait of Hormuz each day, despite the US and Iran failing to reach a peace deal.
Data released by the Baker Hughes on Friday showed that the total oil and gas rig count came in steady at 588 in the week to August 28. While oil rigs declined by 5 to 447, gas rigs rose by 5 to 132.
Weakness in the US dollar lent further support to oil prices as a softer greenback makes commodities cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell more than 0.1% to 99.59 this morning.
Spot price for WTI crude oil jumped 2.2% to $84.56 per barrel, while Brent crude climbed 2.3% to $89.99 per barrel this morning.
In other commodities trading, gasoline gained 0.9% to $3.0776, while heating oil added 1.7% to $4.3193. Natural gas bucked the trend, falling 0.6% to $2.870.
What to watch: Investors will continue monitoring developments in the US-Iran situation and will watch for any sign of Beijing pulling back from Iranian crude purchases.
Context: The Japanese yen gained against the US dollar this morning, with a rebound in oil prices and given the wide US-Japan interest rate gap.
Details: Rising crude prices are a modest headwind for the yen, since Japan imports nearly all its oil. A costlier barrel widens the trade deficit pressure that has weighed on the currency for much of this year.
That pressure compounds the wide gap between US and Japanese interest rates, which continues to encourage investors to invest yen in higher-yielding assets elsewhere.
Data released this morning showed that retail sales in Japan grew by 4% year-on-year in July, accelerating from the previous month’s 0.6% gain. The figure also topped market expectations of a 3% rise. The latest reading was also the fourth consecutive month of growth in retail activity.
Japan also released its industrial production data, which showed 4.10% year-on-year growth in July.
Markets continued to speculate of the Bank of Japan hiking its benchmark interest rates at its September 17-18 meeting. Such speculations have gained momentum after July inflation data showed core prices climbing the most this year.
USD/JPY slipped 0.18% to 159.79 this morning, holding within its recent range between roughly 158.9 and 160.2 over the past week.
What to watch: Investors await the release of the S&P Global Manufacturing PMI from Japan tomorrow. Preliminary data shows an improvement in the S&P Global Japan Manufacturing PMI to 55.1 in August, from 54.5 in the previous month, making this the eighth consecutive month of expansion in factory activity.
Other Markets: European indices closed higher on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.29%, 0.77%, 0.98% and 0.51%, respectively.
Russia launched a drone attack on a warehouse storing weapons near Kyiv’s western suburbs. The news sent the USD/RUB pair lower in forex trading this morning.
Singapore’s bank loans rose to a record high of S$939.1 billion in July from S$931.4 billion in the previous month, which exerted pressure on the USD/SGD forex pair.
Australia’s private sector credit climbed by 0.6% in July, following 0.8% growth in the previous month, which sent the AUD/USD pair higher in forex trading this morning.
Japan’s retail sales surged by 4% year-over-year in July, up from 0.6% growth in the previous month. The latest reading topping market estimates of a 3% rise exerted pressure on the USD/JPY forex pair.
New Zealand’s ANZ business outlook index declined to 53.7 in August from 56.1 in the previous month. However, the NZD/USD pair rose in forex trading this morning.
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