Oil nears $103 as Hormuz attacks rattle markets and UK housing weakens
Oil prices have climbed towards $103 per barrel due to Middle Eastern supply concerns and escalating attacks on tankers in the Strait of Hormuz, whilst reduced US production from hurricane impacts adds further upward pressure. The economic strain extends across global markets: Asian equity indices fell sharply and the UK housing market weakened notably as expectations of rising interest rates dampened buyer confidence and sales activity.
Brent crude advanced 2.6% to $102.80 a barrel, with at least 12 tanker attacks in the week ending 5 October marking the highest weekly frequency since late February. Japan's Nikkei index fell 1.4% and South Korea's Kospi dropped 2.6%, whilst the Royal Institution of Chartered Surveyors reported its house price balance index fell to -32 from -28 in August. The Bank of England is widely expected to raise interest rates from 3.75% to 4% in November, followed by further quarter-point increases next year.
- Oil prices climb to $102.80 on tanker attacks and supply concerns.
- Asian markets fall; UK housing demand weakens as rates loom.
- Interest rate expectations dampen buyer confidence and activity.
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The Strait of Hormuz is a narrow waterway between Iran and Oman through which roughly a third of the world's seaborne oil passes each day. Disruptions there can quickly push up global oil prices because there are few alternative routes for tankers to take, making supply vulnerable to any instability in the region.
Oil prices are rising partly because of recent attacks on cargo ships in the Strait of Hormuz and concerns about Middle Eastern supply. Higher oil costs feed into inflation, which is the rate at which prices across the economy climb, and this in turn influences how central banks like the Bank of England decide to set interest rates.
The UK housing market weakens when interest rates are expected to rise because homebuyers must pay more to borrow money for mortgages. When the cost of borrowing goes up, fewer people can afford to buy property, so house sales and prices tend to fall, which is why property professionals have recently reported a significant decline in the market.
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Originally published by The Guardian as “Oil prices climb amid supply fears and shipping attacks; prospect of rate rise weighs on UK housing market – business live”.