Brent crude punched through $100 a barrel on Thursday for the first time in months after Tehran-backed Houthi rebels said they had struck two Saudi tankers in the Red Sea, a flare-up that instantly repriced the geopolitical premium into every energy contract on the screen. The benchmark jumped as much as 5 percent to trade above $98 before breaching the round number, a level that forces central bankers to recalculate inflation forecasts and equity investors to re-rate the cost of capital across the board.
The attacks came as Iran vowed to keep striking the region so long as US strikes continue, putting both the Strait of Hormuz and the Red Sea under simultaneous pressure, a dual choke-point scenario that Wealth Club strategist Susannah Streeter said has markets bracing for sustained disruption to key energy routes. The dollar firmed against its major peers as a result, while European equities slipped in midday trading with London, Paris and Frankfurt all lower, even as Asian markets caught a bid from a rebound in regional tech names.
That tech bounce, however, looks fragile. Investor appetite for artificial intelligence has been see-sawing for months on doubts about when the trillions committed to the sector will generate a return, and Alphabet’s earnings did nothing to calm nerves. The Google parent signaled it would likely spend as much as $205 billion on AI this year, a figure far above consensus that arrives just as Amazon, Meta and Microsoft prepare to report next week with their own capital-expenditure plans under the microscope.
The yen, meanwhile, slid to a fresh four-decade low against the dollar, caught between the Bank of Japan’s stubbornly low rates and the Federal Reserve’s higher-for-longer stance. Rising oil prices and domestic growth worries are only adding to the pressure on a currency that has become the primary pressure valve for global rate differentials.
What happens next depends on whether the Red Sea strikes remain symbolic or start moving actual barrels off the market. With the US Strategic Petroleum Reserve still depleted and OPEC+ spare capacity shrinking, the margin for error is thinner than the headlines suggest. The $205 billion AI spend is a choice; the oil shock is not.