Forex Today: Oil prices surge and USD rises as Middle East crisis deepens
Here is what you need to know on Monday, March 9:
Markets met a surge in volatility at the weekly opening, with investors assessing the latest developments surrounding the crisis in the Middle East. The economic calendar will not offer any high-tier data releases on Monday, allowing geopolitical headlines and the risk perception to continue to drive the action.
Over the weekend, Iranian President Masoud Pezeshkian apologised to the neighbouring countries for attacks launched following US-Israel strikes and announced that Tehran will not strike "unless they attack first."
The United Arab Emirates, Kuwait and Iraq have decided to reduce Oil production, citing Iranian threat against the safe passage of ship through the Strait of Hormuz. Because tankers are unwilling to cross the strait, oil producers in the region are running out of storage space and opting to curb the output.
Crude Oil prices shot higher at the weekly opening and the barrel of West Texas Intermediate (WTI) hit its highest level since June 2022 above $110, while the barrel of Brent climbed above $114. During the Asian trading hours, news of the International Energy Agency (IEA) considering a coordinated release of emergency oil reserves among G7 member countries to stabilize markets helped Oil prices correct lower. At the time of press, the barrel of Brent was trading near $105, rising about 15% on the day, and the barrel of WTI was up 13% near $100. US President Donald Trump posted on Truth Social that the short-term increase in Oil prices was a "very small price to pay" for destroying Iran's nuclear threat.
Meanwhile, Iran has named Mojtaba Khamenei, Ali Khamenei's son, to succeed as the new supreme leader. Fox News reported that US President Trump was "not happy" with Iran's appointment.
The Israeli military said early Monday that it has started a new wave of attacks in central Iran and also targeted Hezbollah infrastructure in Beirut. Iran also reportedly continues its attacks, with outlets noting drone interceptions heading to the US diplomatic facility near the Baghdad international airpot and Saudi Arabia’s northern Jawf region, in addition to reports about rising thick smoke from the direction of the Bapco oil refinery in Bahrain.
The US Dollar (USD) benefits from the risk-averse market atmosphere on Monday. At the time of press, the USD Index was up 0.5% on the day at 99.30 after having gained more than 1% in the previous week, while US stock index futures were last seen losing between 1.7% and 1.5%.
US Dollar Price Last 7 Days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.84% | 0.63% | 1.60% | -0.61% | 0.69% | 1.11% | 1.50% | |
| EUR | -1.84% | -1.20% | -0.26% | -2.40% | -1.13% | -0.71% | -0.33% | |
| GBP | -0.63% | 1.20% | 0.78% | -1.23% | 0.06% | 0.49% | 0.87% | |
| JPY | -1.60% | 0.26% | -0.78% | -2.13% | -0.86% | -0.38% | -0.07% | |
| CAD | 0.61% | 2.40% | 1.23% | 2.13% | 1.27% | 1.79% | 2.13% | |
| AUD | -0.69% | 1.13% | -0.06% | 0.86% | -1.27% | 0.42% | 0.81% | |
| NZD | -1.11% | 0.71% | -0.49% | 0.38% | -1.79% | -0.42% | 0.39% | |
| CHF | -1.50% | 0.33% | -0.87% | 0.07% | -2.13% | -0.81% | -0.39% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Gold (XAU/USD) struggles to capitalize on safe-haven flows and trades in the red near $5,100 losing about 1% on the day.
EUR/USD opened with a bearish gap and touched its weakest level since late November near 1.1500. The pair recovers in the early European session but remains deep in negative territory at around 1.1550. Germany's Destatis reported on Monday that Industrial Production contracted by 0.5% on a monthly basis in January.
The data from China showed earlier in the day that annual inflation, as measured by the change in the Consumer Price Index (CPI), jumped to 1.3% in February from 0.2% in January.
USD/JPY climbed toward 159.00 in the early Asian session on Monday before retreating to the 158.50 region. Japan Prime Minister Sanae Takaichi said on Monday that it’s hard to say how the conflict in the Middle East could affect Japan's economy.
GBP/USD stays on the back foot and loses more than 0.5% on the day below 1.3350 in the European morning on Monday.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
