Key Takeaways
- Saudi Arabia’s Petroline going offline helped send Brent 3% higher to $109, putting a critical oil route under pressure.
- Bitcoin’s price fell 0.8% to $76,611 as the Petroline mess gave already-jittery global markets another headache.
- CME has Wednesday’s rate hike odds at 86.2%, while Petroline’s repair timeline could make inflation worse.
Petroline Strike Sends Oil to $109 as Global Markets Flinch
Earlier this week, drones crossing into Saudi Arabia from Iraqi airspace to strike pumping stations caused a great deal of alarm. Statistics show the Petroline funnels around four million barrels of oil every single day.
Additionally, this specific route was Riyadh’s mandatory bypass to keep crude flowing during the U.S.-Israeli war. Since the strike, Brent skyrocketed to $109 a barrel, while West Texas Intermediate crude jumped to $102.80. The market doesn’t like the implications of this matter one bit, and U.S. stock futures are lower on the news.
The Dow shed about −0.3%, S&P 500 about −0.5% to −0.6%, and Nasdaq around −1.0% to −1.2%. Alongside this, Japan looks set for a weak Monday, with Nikkei futures down about 1.8%; Hong Kong futures are roughly flat to slightly up. Meanwhile, gold spent the weekend hovering quietly near $4,350 an ounce, was caught flat-footed, and is down about 1.5% for the week.
At $76,611 per coin at 7:50 p.m. EDT on Sunday, bitcoin’s price is down 0.8% today and 4.1% over the last seven days. It’s been playing safe all week and drifting between $76,300 to $77,450 during the 24-hour window. The entire crypto economy has shed a percentage point and stands at $2.62 trillion as nearly every market is walking a tightrope, waiting to see what breaks first.
Pipeline Damage Complicates the Fed’s Already Difficult Rate Decision
Before the pipeline went offline, markets heavily priced in an interest rate hike for Wednesday, aiming for a 3.75% to 4.00% target range. CME’s Fedwatch tool points to a 86.2% chance a rate hike is coming.
With the Petroline immobilized and Hormuz being practically impassable due to the conflict with Iran, the issues threaten consumer inflation across the board. It makes the chances of a hike even more bolstered as the world watches the technicians at the pipeline.
If repair crews can patch the pipeline quickly, Sunday’s oil panic will fade into a temporary blip. If the damage requires the full six weeks to fix, the inventory runs dry in less than a week.
