BRENT crude surged towards US$109 a barrel on Friday and was on track for a weekly gain of about 13 per cent, its biggest since mid-July, as intensifying fighting between the United States and Iran heightened fears of prolonged disruption to global energy supplies.
US crude was approaching US$104 a barrel and was also set for a weekly gain of more than 13 per cent.
The oil rally came as top US officials reportedly warned President Donald Trump that the conflict could continue through the remainder of his term, which ends in January 2029.
Iranian leaders have reportedly remained determined to continue fighting despite mounting economic costs, viewing the conflict as an existential threat.
Tehran has also claimed it has rebuilt its missile capabilities and could intensify attacks on US and Gulf assets if Washington escalates its strikes.
Fighting has intensified over the past two weeks, with the United States targeting Iranian oil tankers while Iran has launched missiles at US warships and tankers in the Persian Gulf, as well as American assets in neighbouring countries.
The escalation has raised the prospect of a prolonged oil supply shock, with sustained higher crude prices potentially adding to inflationary pressures and complicating the outlook for monetary policy.
The US dollar index rose 0.23 per cent to 99.048 at 3pm (1900 GMT) on Thursday as the oil rally prompted investors to increase bets on a Federal Reserve rate increase next week.
Markets were pricing in a 70 per cent chance of a 25-basis-point increase, up from 60 per cent a day earlier, while a hike was fully priced in for October.
US producer price data reinforced concerns over energy-driven inflation, although it did little to alter expectations for a Fed hike. Headline producer prices rose 0.4 per cent month-on-month, while core PPI increased 0.2 per cent, below the previous month's 0.3 per cent rise and forecasts for a 0.3 per cent increase.
The US consumer price index report due Friday will be closely watched for further clues on inflation and the outlook for interest rates.
Elsewhere, the European Central Bank raised borrowing costs by 25 basis points as expected and lifted its inflation forecasts.
In late New York trading, the euro fell to US$1.1613 from US$1.1630 in the previous session, while the British pound declined to US$1.3513 from US$1.3546.
The US dollar rose to 154.32 yen from 153.60 yen and strengthened to 0.8129 Swiss francs from 0.8103 francs and 1.3830 Canadian dollars from 1.3806 Canadian dollars.
The dollar also rose to 9.6782 Swedish kronor from 9.6009 kronor.
Against the Malaysian ringgit, the US dollar rose 0.23 per cent to 4.0756 on Sept 11, 2026.
The ringgit has strengthened 0.24 per cent against the US dollar over the past month and 3.08 per cent over the past 12 months. - September 11, 2026
