Oil Prices Fall to $104 as Global Shares Diverge Ahead of US Inflation Data

Brent crude fell 3.3% to $104.09 a barrel Friday as tensions between the United States and Iran intensified, while global stock markets were mixed following losses on Wall Street. Investors were awaiting August US consumer price data before the Federal Reserve’s meeting next week, after producer prices accelerated to 5.4% year over year.

Brent had climbed above $108 earlier and remained far above its level of approximately $72 a barrel in late February, before the war began. Benchmark US crude declined 2.8% to $99.63 a barrel, while average US diesel prices rose past $6 a gallon and set another record.

Oil flows through the Strait of Hormuz remained “well below pre-war levels,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a Friday commentary. Yu Song, chief China economist at UBS Securities, said in a separate commentary that oil prices were likely to stay elevated for the rest of the year even if tensions eased, adding to inflation uncertainty.

European stocks advanced in early trading. Britain’s FTSE 100 gained 0.5% to 10,656.44 after official data showed the British economy grew faster than economists expected in July. Germany’s DAX and France’s CAC 40 each rose 0.6%, reaching 25,514.37 and 8,161.31, respectively.

Most Asian markets declined. Japan’s Nikkei 225 fell 1.9%, South Korea’s Kospi lost 1.8%, Hong Kong’s Hang Seng slipped 0.6% and the Shanghai Composite dropped 1.2%. SoftBank Group fell almost 4%, Samsung Electronics declined 3.5% and SK Hynix lost 2.2%, while Chinese AI chipmaker Enflame surged 179% in its Shanghai trading debut.

On Thursday, the S&P 500 fell 0.6% for its fourth consecutive loss, the Dow Jones Industrial Average declined 0.6% and the Nasdaq composite dropped 0.7%. The US producer price index for August rose 5.4% from a year earlier, accelerating from 4.8% in July. Treasury yields remained well above pre-war levels amid higher energy prices, inflation pressures and rising US government debt, with the 10-year yield at about 4.94% early Friday, up from 4.83% on Wednesday.