BRENT crude climbed above US$91 a barrel on Tuesday as renewed fighting between the United States and Iran fuelled concerns over disruptions to Middle Eastern oil supplies, threatening to deepen pressure on global energy markets.
US forces targeted two Iranian rocket launchers on Larak Island, while Tehran responded with attacks on targets in the United Arab Emirates and Jordan, marking a resumption of direct hostilities after about a month of relative calm.
US President Donald Trump also threatened further strikes against Iran, including Kharg Island, the country’s key oil export hub.
Oil shipments through the Strait of Hormuz have continued, with major Gulf producers including the UAE, Saudi Arabia, Kuwait and Iraq still exporting some volumes.
But the risks to shipping remain high after a super tanker caught fire in the strait after striking two naval mines, underscoring the vulnerability of a vital route through which a significant share of global oil supplies passes.
Global refining capacity is also under pressure after strikes on Russian refineries, driving refined-product margins to fresh highs.
US crude rose above US$86 a barrel, extending gains from the previous session.
The surge in oil prices also put further pressure on Japan’s yen, which remained close to the key 160-per-dollar threshold as investors assessed the impact of higher energy costs on the country’s economy.
Meanwhile, Reuters reported today that the yen last traded at 159.81 per US dollar after weakening beyond 160 in the previous two sessions.
US Treasury Secretary Scott Bessent stepped up pressure on Japan’s government and central bank to raise interest rates later this month, saying he expected policymakers to take measures that would strengthen the yen.
"I have information that the market doesn't have, and it's my belief that the Japanese government and the BOJ will do the things that will lead to a stronger yen," Bessent told CNBC during a Group of 20 finance leaders' gathering.
A rare joint intervention by the US and Japan at the end of July had provided only temporary relief for the yen, which has since surrendered most of those gains.
Markets are pricing in a 73 per cent chance of a Bank of Japan rate hike later this month, although analysts said a single increase may not be enough to generate a sustained recovery in the currency.
"For the yen, a September BOJ hike is already heavily anticipated," said Charu Chanana, chief investment strategist at Saxo.
"With US yields still high and rising oil worsening Japan’s terms of trade, the yen probably needs a more hawkish BOJ path beyond September — not just one hike — to sustainably move away from 160."
The US dollar, meanwhile, eased despite rising oil prices and Treasury yields as investors weighed the prospect of a Federal Reserve rate hike this month.
The dollar index, which measures the US currency against six major currencies, slipped to around 99.37.
Fed Chair Kevin Warsh said at the Jackson Hole symposium of central bankers that the Federal Reserve will "have work to do" if policymakers do not gain confidence that inflation is cooling, strengthening expectations of a possible rate increase at the September meeting.
Markets were pricing in about a 65 per cent chance of a Fed hike later this month, up from 41 per cent a week earlier, according to the CME FedWatch tool.
"It is notable that higher oil prices and Treasury yields have failed to support the USD," said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
"The overnight USD weakness may reflect markets reassessing whether Chair Warsh's hawkish stance is sufficient to restore Fed credibility. Rising expectations of a September BOJ rate hike also added further pressure to the USD."
Investors will turn to a series of economic indicators due later this week, including the US jobs report, for clues on the Federal Reserve’s next interest-rate decision.
The dollar index is on track to fall about 0.2 per cent in August, marking its second consecutive monthly decline.
Elsewhere, the euro was steady at US$1.1623 after gaining almost 1 per cent in August, while sterling stood at US$1.35575 after rising 0.5 per cent last month.
The Australian dollar was slightly firmer at US$0.7172, while the New Zealand dollar traded at US$0.5921.
The renewed confrontation between Washington and Tehran, combined with risks to shipping through the Strait of Hormuz and tighter global refining capacity, leaves energy markets facing heightened volatility as September begins. - September 1, 2026
