Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. The global economy faces the prospect of $100 a barrel oil again, as the conflict in the Middle East continues. Brent crude has risen back over the $98 a barrel mark already this week, its highest level since 24 July.
Oil has been pushed up by reports that Yemen’s Iran-aligned Houthis attacked energy facilities in Saudi Arabia. Saudi authorities said operations at some energy facilities had been halted today following attacks by Yemen’s Iran-aligned Houthis that wounded more than 70 people. The attacks add to the pressure on oil and gas production in the region, which remains badly disrupted by the ongoing Iran war.
Yesterday, the Financial Times reported that Saudi Aramco’s oil facilities in the Saudi Arabian city of Jizan – where one of the country’s largest refineries is based – have been attacked Earlier today, Iran threatened to create a new restricted zone in the Gulf if the US pressed on with its ‘economic warfare’ against Tehran. Such a zone would, presumably, further undermine US efforts to reopen the strait of Hormuz. Mohsen Rezaei, the secretary of Iran’s Supreme National Security Council, said Iran had “ fundamentally recalibrated” its posture towards US forces.
In recent days, Washington has received a clear warning from Iran’s new missiles. Economic warfare will be met by a maritime exclusion zone across the Persian Gulf to the blockade perimeter. The operational posture toward U.S. warships and bases has been fundamentally recalibrated.
Shipping traffic through the Strait of Hormuz has already slowed this week – just seven commodity vessels sailing through the Strait of Hormuz on Monday, down from eight on Sunday. Before the war began, about 130 ships a day would cross the strait. This is all a headache for central bankers, as high oil prices create inflationary pressures through the economy.
Later today, MPs in London will question Bank of England governor Andrew Bailey, and colleagues, about their recent decision to hold the Bank Rate at 3.75%. MPs are likely to question witnesses on the potential inflationary impact of the ongoing war in Iran and how the MPC considers recent developments in AI, the committee says. 2.15pm BST: Bank of England policymakers appear before the Treasury select committee
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