Oil prices rise on Middle East tensions as global markets react to interest rates, tech and trade tensions

The high oil price continues to have a negative impact. Crude oil, Brent, the most important type for Europe, for delivery in November rose by 3.1 percent to $106 per barrel (159 liters). The Brent price had already risen on Tuesday and Wednesday.

Investors are torn between the hope of a resolution to the conflict between the USA and Iran and the prospect of a continuing difficult supply situation, experts explain.

The reason for the increase in oil prices is the ongoing tense situation in the Middle East. The Strait of Hormuz, which is important for oil transport, is still barely navigable. On Wednesday, Secretary of Iran's Supreme National Security Council, Mohsen Rezaei, said the Strait of Hormuz would not be reopened until Iran's conditions were met.

With the high energy prices, fears of inflation and interest rates remain present in the market. Kyle Rodda, market analyst at capital.com, writes that strong demand signals from industry and services suggest that supply and demand in the US economy remain out of balance. This in turn increases the risk of further interest rate increases in the USA.

Thomas Altman from QC-Partners writes that the US's consideration of a ban on exports of diesel has given rise to new concerns about inflation globally. But: “New economic data shows that economies around the world are coping well with the higher interest rate levels so far.”

Government bond yields have recently risen again after strong US economic data led to rising interest rate expectations in the markets. The interest rate on ten-year bonds on the bond markets is becoming increasingly clear beyond the psychologically important five percent mark.

The 30-year US government bonds peaked at 5.4583 percent, the highest yield since 2004. While the interest rates for short-term US bonds reflect interest rate expectations, the 30-year bonds show the willingness of investors to finance the national debt in the long term.

The yield on the ten-year US government bond rose to 5.13 percent on Wednesday - reaching its highest level in almost 20 years. However, it attracted one of the lowest levels of interest ever seen in an auction of this duration. According to Kyle Rodda, this is an indication that investors' reluctance to invest in US government securities is not only related to what they see as inadequate inflation compensation, but also to dwindling confidence in the asset class itself.

Xi's first trip to the US in nearly three years will focus on tensions between the superpowers over trade and technology. “Tariffs, export restrictions, artificial intelligence, Taiwan and the Iran war are on the table,” stated Jürgen Molnar, strategist at Robomarkets.

A state banquet is planned for the evening, which will also be attended by the heads of US companies such as Apple, Nvidia, OpenAI and JPMorgan. Trump said in the afternoon before the formal talks began that since his first election in 2016, Xi and he had built a "really great friendship" based on mutual respect and the essential interests of both peoples.

In keeping with this, Xi announced that China would send two pandas to the Atlanta Zoo. He described the animals as “ambassadors of friendship”. China also wants to invite 100,000 young US citizens for exchange and study visits over the next five years. Both countries must coexist peacefully and competition should be positive and within limits, Xi said.

He also said that China and the US share the responsibility to ensure that artificial intelligence always remains under human control. Trump, in turn, announced results on this issue. He said: “The decisions we make in these areas today can promote peace and prosperity for decades.”

In the run-up to the three-day state visit, the US government recently extended the tariff break in the trade conflict with China. According to US Treasury Secretary Scott Bessent, the agreement has been extended until January 10th. In October 2025, Xi and US President Donald Trump agreed on a break in the trade conflict at a summit in Busan, South Korea.

US Federal Reserve Director Michael Barr assumes that the Fed will likely have to raise rates several times after the latest interest rate hike due to stubborn inflation. According to CME Group's FedWatch tool, traders are pricing in a 68 percent chance of a rate hike in October.

Meta Platforms: CEO Mark Zuckerberg unexpectedly presented a new AI pocket device called “Charm” on Wednesday: a small device with a screen about two inches in size and a 5G modem, but with which you cannot make phone calls. Users can use it to access the company’s AI assistant “Muse”. Zuckerberg said he sees “personal superintelligence” as the next big technological breakthrough.

However, analysts pointed out that similar products have failed in the past. "Unless 'Charm' can offer unique features, it is more likely to remain a 'nice-to-have' device for technology enthusiasts rather than becoming a mass-produced product," said Linda Sui, founder of analytics firm Smart Analytics Global. The shares of the Facebook parent company increased by around 3.7 percent.

MGM Resorts: The withdrawal of a multi-billion dollar takeover offer is causing problems for the shares of the US casino operator MGM Resorts. The shares lost over ten percent to $33.89 on Wall Street. This means they have fallen to their lowest level in seven months.

Oracle: A media report about problems with an Oracle data center project has unsettled investors. The US software company's shares lost 3.4 percent. Oracle wants to protect itself from possible cost increases in a large data center project in New Mexico and has sent the project developer Blue Owl a statement about so-called force majeure, reported the Bloomberg news agency, citing insiders.

Companies commonly invoke force majeure to be relieved of contractual obligations when unforeseeable problems arise. Oracle intends to defer payments if the project, called Jupiter, stalls and does not come online as planned in 2028, the Bloomberg report added.

PepsiCo: A media report about new price increase plans is weighing on the shares of the US beverage manufacturer. The titles are down around 0.8 percent. PepsiCo plans to raise prices on some chips and sodas by the end of the year or early 2027, Bloomberg reported, citing insiders. PepsiCo previously cut prices on products like Lay's and Doritos by up to 15 percent this year. The reason for this was customer resistance to previous increases.