United States: Oil prices extended gains for a third consecutive session on Wednesday as renewed hostilities in the Gulf heightened concerns over global energy supplies after U.S.-Iran peace talks stalled.
U.S. crude futures surged about 2% to $95.40 per barrel, reflecting growing market anxiety over potential disruptions in the Strait of Hormuz, a critical global oil transit route. At the same time, the U.S. dollar briefly touched 160 yen before easing slightly, as traders remained cautious about the possibility of intervention by Japanese authorities to support the currency.
Supply concerns were further amplified by a sharp decline in U.S. crude inventories. According to market sources citing data from the American Petroleum Institute (API), U.S. crude stockpiles fell by 6.8 million barrels in the week ending May 29, marking the seventh consecutive weekly decline. Official U.S. government inventory data is scheduled for release later on Wednesday.
ANZ Bank Senior Commodity Strategist Daniel Hynes said efforts to fully restore shipping through the Strait of Hormuz continue to face significant obstacles, noting that Iran has mined large sections of the strategic waterway. While some vessels have resumed transit, shipping activity remains well below pre-conflict levels, he added.
The latest escalation followed statements from U.S. Central Command, which said Iran launched missiles toward Kuwait and Bahrain. According to the U.S. military, the missiles were either intercepted or failed to reach their targets, prompting retaliatory strikes on Iran’s Qeshm Island, located in the Strait of Hormuz. Iran’s Revolutionary Guards subsequently claimed responsibility for attacks targeting the headquarters of the U.S. Fifth Fleet.
The renewed violence has cast doubt on prospects for a diplomatic breakthrough. Although Washington and Tehran announced last week that they had reached a tentative framework to halt the conflict, no formal agreement has yet been finalized.
Chris Weston, Head of Research at Pepperstone, said markets had previously priced in expectations of a diplomatic settlement but are now reassessing those assumptions as tensions intensify. He noted that investors are increasingly unwinding positions based on hopes of an imminent agreement.
Financial markets reacted cautiously. S&P 500 futures edged lower, while cryptocurrencies experienced heavy selling pressure. Bitcoin fell nearly 10% over three sessions to a two-month low of $66,123.
Despite geopolitical uncertainty, the artificial intelligence-driven rally continued to support equity markets. Asian stock indexes advanced, with benchmark indexes in Taiwan and Japan reaching record highs. South Korean markets remained closed.
Technology shares led gains on Wall Street overnight. Marvell Technology surged 32.5% to a record high after Nvidia Chief Executive Jensen Huang described the semiconductor company as a potential trillion-dollar enterprise during Computex events in Taipei.
Separately, reports emerged that SpaceX plans to raise approximately $75 billion through an initial public offering next week by offering 555.6 million shares at a target price of $135 each, according to a source familiar with the matter.
In bond markets, benchmark 10-year U.S. Treasury yields were little changed at 4.46% after recent gains. Economic data released overnight showed U.S. job openings increased by the largest amount in five years during April, reinforcing expectations that the labor market remains resilient.
Investors are now awaiting the U.S. services ISM report later Wednesday and the closely watched U.S. employment report due on Friday.
Peter Dragicevich, Asia-Pacific Currency Strategist at Corpay, said stronger-than-expected labor market data could reinforce expectations that the U.S. Federal Reserve may need to raise interest rates later in the year, potentially strengthening the dollar further.
Interest-rate expectations have shifted significantly in recent weeks. Markets, which had previously anticipated rate cuts before the Iran conflict intensified, are now pricing in roughly 18 basis points of Federal Reserve rate increases this year. Investors have also largely priced in a European rate hike next week following stronger inflation data, while markets assign approximately a 75% probability of a June rate increase in Japan.
In currency markets, the euro traded at $1.1627, while the dollar remained near the key 160-yen threshold at 159.86.
Meanwhile, data showed Australia’s economy slowed during the March quarter. While a boom in data-center investment supported business spending, rising imports weighed on overall growth. The Australian dollar remained broadly stable at $0.7177.