Dollar hits two-week high, Middle East conflict and rate paths in focus
Oil prices reached new 6-week highs this week due to intensifying tensions between the US and Iran, which raised concerns over Middle East supply risks. While prices eased on Friday, the commodity is on track for its steepest weekly gain since mid-July. Shipping data shows a decline in activity, with only 6 commodity vessels transiting the Strait of Hormuz on Wednesday, compared to 11 the previous day and a 10-day average of 13. This volatility coincides with a strong US dollar and shifting metal prices.
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- ✓ Oil prices reached new 6-week highs this week due to intensifying tensions between the US and Iran, which raised concerns over Middle East supply risks.
- ✓ While prices eased on Friday, the commodity is on track for its steepest weekly gain since mid-July.
- ✓ Shipping data shows a decline in activity, with only 6 commodity vessels transiting the Strait of Hormuz on Wednesday, compared to 11 the previous day and a 10-day average of 13.
What changed
Oil prices hit a 6-week high and are seeing their largest weekly increase since mid-July.
Live updates
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Oil hits 6-week high as US-Iran tensions drive weekly gains
Oil prices reached new 6-week highs this week due to intensifying tensions between the US and Iran, which raised concerns over Middle East supply risks. While prices eased on Friday, the commodity is on track for its steepest weekly gain since mid-July. Shipping data shows a decline in activity, with only 6 commodity vessels transiting the Strait of Hormuz on Wednesday, compared to 11 the previous day and a 10-day average of 13. This volatility coincides with a strong US dollar and shifting metal prices.
Why it matters
Heightened hostilities between the US and Iran create instability in key energy transit corridors. These geopolitical risks often trigger safe-haven buying of the US dollar and drive up energy costs, which can revive inflation concerns.
Still unconfirmed
- The Singapore dollar is tracking the US currency in an inverse direction more closely than any other Asian currency.
- Aluminium prices reached a three-week high on Thursday.
- Dubai 22K gold prices fell below Dh500 per gram on Friday morning.
- Preliminary shipping data shows 6 commodity vessels transited the Strait of Hormuz on Wednesday, down from 11 on Tuesday.
What to watch next
- US labor market data releases.
- Changes in vessel transit volumes through the Strait of Hormuz.
- Further diplomatic or military developments between the US and Iran.
confidence 80%Sources used for this update (6)
- www.straitstimes.com — Dollar debasement is favouring Singapore’s currency, analysts say
- www.marketscreener.com — Aluminium touches three-week high, supply back in focus
- www.cnbc.com — Oil set for steepest weekly gain since mid-July over intensifying U.S.-Iran tensions
- www.khaleejtimes.com — Oil prices hit fresh 6-week highs on renewed Middle East tensions
- www.khaleejtimes.com — Air Arabia increases Bangkok frequency with 4 daily flights from Sharjah
- www.khaleejtimes.com — Dubai gold prices drop; 22K slips below Dh500 per gram
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US Dollar Climbs Amid Middle East Tensions and Inflation Fears
The US dollar rose on September 2, reaching a multi-week high as investors sought safety amid escalating hostilities between the US and Iran. Gains were supported by rising oil prices and increased yields, which revived concerns regarding inflation. The currency is on track for a weekly gain following comments from Warsh. While the dollar strengthened against most peers, the British pound hit a three-week low due to the conflict and selling pressure in the UK government bond market. Market attention now shifts toward US labor market data.
Why it matters
Safe-haven assets typically attract investors during geopolitical instability, which often drives up the value of the US dollar. Rising oil prices can trigger inflation, potentially influencing the path of interest rates. The interaction between Middle East volatility and bond market performance determines currency volatility for the US and UK.
What is confirmed
- The US dollar rose to a multi-week high on September 2.
- Hostilities in the Middle East contributed to the dollar's rise and lifted oil prices.
- The British pound fell to a three-week low against the US dollar.
- Rising yields and oil prices revived inflation fears.
Still unconfirmed
- The dollar jumped specifically after comments from Warsh.
What to watch next
- Release of US labor market data
- Further escalation or de-escalation of US-Iran hostilities
- Changes in UK government bond market selling pressure
confidence 85%Sources used for this update (10)
- Reuters — Dollar steadies near two-week high as Middle East hostilities lift oil
- FXStreet — Forex Today: Enter the US labour market
- CNBC — Dollar gains as oil, yield increases revive inflation fears
- Yahoo Finance — Dollar jumps after Warsh comments, set for weekly gain
- Barron's — Dollar Rises to Highest in Nearly 3 Weeks
- www.econotimes.com — Europe Roundup: Sterling hits 3-week low against greenback ,European shares fall, Gold falls , Oil retreats –September 2nd ,2026
- www.straitstimes.com — US dollar hits 7-week high, Middle East conflict and rate paths in focus
- www.thejakartapost.com — Dollar hits two-week high with Middle East conflict in focus
- www.economies.com — Dollar hits three-week high against sterling as focus turns to Middle East and UK bonds
- www.marketscreener.com — Jack Daniel's maker flags soft alcohol demand for year, sees no respite in Canada
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