Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “Oil has jumped nearly 20 per cent this week, putting it on track for its biggest weekly advance since February 2022.
“Higher prices tend to feed through to consumers almost immediately via rising petrol costs, which in turn risks reigniting inflation pressures just as central banks were hoping for some relief.
“Still, stock markets have been reasonably robust considering the events, a signal that investors are siding with the transitory narrative for now, a view we share.
“Gold is trading up to around $5,110 per ounce this morning but is still on track for its first weekly decline in five weeks – something that may come as a surprise given the ongoing geopolitical tensions.
“While the Middle East conflict has boosted demand for safe-haven assets, the resulting surge in oil prices has stoked fresh inflation concerns, prompting traders to dial back expectations for rate cuts.
“Markets are now pricing in just one US cut this year, down from two earlier in the week, after surging oil prices and a run of solid US data pointed to continued economic resilience.
“Rate expectations often don’t get the attention they deserve, but they’ve quietly been one of the biggest forces at play this week.”
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