BNY’s Bob Savage notes that WTI and Brent prices are rising for a third day as United States (US)-Iran tensions escalate, with missile and drone attacks in the Gulf region pushing benchmarks toward and above USD 90. Savage warns that sustained WTI above USD 90 reshapes rate expectations and growth risks, with war and energy dynamics dominating the macro narrative into H2 2026.

Gulf tensions fuel crude rally

"The third day of oil price rises has left global shares lower and U.S. equity futures weaker. The escalation in the U.S.-Iranian conflict has again been the driving force, pushing bond yields and USD higher. The economic data produced mixed results: China’s services PMI rose to a three-month high, while Australian Q1 GDP was softer than expected."

"Gulf hostilities escalated again overnight, with the U.S. military saying Iranian missile and drone attacks on Bahrain, Kuwait and other regional targets were intercepted, failed or fell short. U.S. Central Command said missiles aimed at Kuwait broke apart in flight, several ballistic missiles did not reach their targets and three missiles heading for Bahrain were intercepted, while U.S. forces also downed drones and struck Qeshm Island after attempted attacks. Iranian state media said the Revolutionary Guards targeted the U.S. Fifth Fleet headquarters and other sites in response to a U.S. strike."

"The flare-up drove oil prices higher and came as tentative Iran-U.S. talks remained unresolved. Brent +2.698% to 98.59, WTI +2.902% to 96.48, Omani crude -0.109% to 91.96, Dubai crude +1.716% to 93.906."

"Economic data will be important for the U.S. session ahead, but the risks from the war and energy remain in control of the rate narrative and threat to growth. An extended period of WTI oil prices above $90/barrel is shifting expectations and testing hopes that the conflict can be looked through. Any turnaround in risk today starts from a high base given May’s gains, leaving little room for any disappointment."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)