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- Iran’s military claims it has hit two U.S. vessels and eight oil tankers in the Gulf.
- It marks a fresh retaliation after the U.S. said it had destroyed five Iranian oil tankers.
- Oil is driving higher towards $100 a barrel for Brent.
- China’s wholesale inflation tops estimates in August, while the Bank of England warns of another inflation burst.
- U.S. futures are flat after the Dow falls 600 points.
Brent crude oil prices paused in early trading on Tuesday after gaining in the previous session following a drone attack on an oil pipeline pumping station in Russia that reduced flows from Kazakhstan.Bloomberg Creative | Bloomberg Creative Photos | Getty Images
Hello, this is Leonie Kidd coming to you from London. Welcome to another edition of CNBC’s Daily Open.
Markets seem trapped in a cycle of Iran tensions leading to higher oil prices, which leads to stocks moving lower and ultimately inflation concerns rising.
Wednesday is no different, with crude prices marching back towards triple digits and inflation sirens ringing from Beijing to London to Washington.
Read on for more.
What you need to know today
Iran’s Revolutionary Guard claimed it has struck two U.S. vessels and a further eight oil tankers in the Gulf. The move comes in response to American military attacks on five Iranian crude oil tankers, which U.S. Central Command said it had destroyed on Tuesday.
The strikes from both sides mark an escalation in military hostilities as the Trump administration continues its pressure on Tehran via economic sanctions.
Risk-off back on
The developments are keeping oil prices sharply higher. In early Wednesday trade, U.S. benchmark West Texas Intermediate futures for October delivery are holding around $94 a barrel, while futures for Brent crude, the international benchmark, are within cents of $100 a barrel.
Speaking on “Squawk Box Asia,” Daan Struyven, Goldman Sachs’ co-head of global commodities research, said that prices driving above $120 “is definitely plausible.”
Inflation situation
The inflationary fallout is being felt across the globe. Data for August shows Chinese wholesale inflation topping expectations, pushed higher by commodity costs.
Meanwhile, in the U.K., Bank of England Governor Andrew Bailey has warned that inflation risks are on the upside. Addressing the Commons on Tuesday, he said, “we have higher energy prices, and they could be higher still.”
The negative sentiment is playing out in stock markets, with the Dow closing 600 points lower in back-to-back losses. Asian equities are mixed in Wednesday’s trade, while U.S. and European futures are lacking direction.
Hit into the rough
It’s a tough day on the fairway for LIV Golf. The sporting venture has filed for Chapter 11 bankruptcy protection after its key backer — Saudi Arabia’s Public Investment Fund — indicated it would pull funding. The group is now searching for new investment.
— Leonie Kidd
And Finally…
Hit TV show ‘South Park’ becomes ‘South America’
Television comedy series “South Park” has announced it is changing its name to “South America” as the show is set to begin its 29th season on Sept. 16.
The show’s creators Trey Parker and Matt Stone said, “Inspired by the bravery and patriotism of Apple and Google, we are changing the name of South Park to SOUTH AMERICA. We especially want to thank our parent company Paramount — a Skydance Capitulation.”
— Lim Hui Jie
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