Oil prices rose more than 1% on Tuesday, recovering part of the previous session’s losses after Iranian attacks on the United Arab Emirates reignited supply concerns, while the Strait of Hormuz remains largely closed.

Brent crude futures rose by $1.73, or 1.7%, to $101.94 per barrel as of 13:15 GMT, while US West Texas Intermediate crude rose by $1.23, or 1.3%, to $94.73 per barrel.

Prices had declined in the previous session, with Brent losing 2.8% and US crude falling 5.3% after some vessels passed through the vital Strait of Hormuz.

The war between the United States, Israel, and Iran has entered its third week with no signs of ending, as Iranian attacks on the UAE resumed. Oil loading operations at Fujairah port were partially halted on Tuesday after a third attack in four days caused a fire at the export terminal, while operations at the Shah gas field remain suspended following an earlier attack.

Fujairah port, located on the Gulf of Oman just outside the Strait of Hormuz, is a vital transit point for about 1% of global oil demand.

At the same time, disruptions to shipping through the Strait of Hormuz — a route for about 20% of global oil and liquefied natural gas trade — have intensified concerns over supply shortages, higher energy costs, and rising inflation.

Tony Sycamore, market analyst at IG, said in a note that risks remain elevated, as a single Iranian militia launching a missile or planting a mine in a passing tanker could reignite the situation entirely.

In the same context, several US allies rejected President Donald Trump’s call on Monday to send warships to escort shipping through the strait, drawing criticism from Trump, who accused Western partners of lacking appreciation after decades of support.

Kevin Hassett, White House economic adviser, told CNBC on Tuesday that oil tankers have begun gradually passing through the Strait of Hormuz, noting that the Trump administration expects the conflict to last weeks rather than months.

Although this has eased concerns about an immediate supply shock from the Middle East, investment bank Cavendish said traders still expect significant market disruptions.

Middle Eastern crude prices have surged to record levels, becoming the most expensive globally, amid claims from traders that the shortage of available deliverable supply is the main driver behind the rise.

Sources told Reuters that the effective closure of the Strait of Hormuz has forced the United Arab Emirates, the third-largest producer in OPEC, to cut its production by more than half.

Oil prices remain likely to rise further by the end of March, as OANDA analyst Kelvin Wong said technical analysis places the medium-term resistance level for West Texas Intermediate at $124 per barrel.

In an effort to curb rising energy costs, the head of the International Energy Agency suggested that member countries pump more oil in addition to the 400 million barrels previously agreed to be released from strategic reserves.

The US dollar edged lower on Tuesday as investors shifted their focus to central bank meetings amid uncertainty surrounding the war in the Middle East and oil price expectations.

Crude oil futures remained above the $100 per barrel level, supported by supply concerns as the Strait of Hormuz remains largely closed, despite a pullback in the previous session after some vessels passed through the vital waterway.

Mohit Kumar, economist at Jefferies, said that if Iran allows ships bound for India, China, and South Asia to pass, this could significantly ease supply pressures.

The US dollar index, which measures the currency against a basket of six major currencies, fell 0.10% to 99.75 points, after reaching 100.54 on Friday, its highest level since May 2025, as investors turned to safe-haven assets while currencies such as the euro and yen were more exposed to the impact of rising oil prices.

Bhanu Baweja, strategist at UBS, estimated that oil prices could reach $120 if the Strait of Hormuz remains closed until the end of March, and $150 if the closure continues until the end of April.

In an escalation of tensions, a senior Iranian official said the new Supreme Leader rejected de-escalation proposals conveyed by mediators, demanding that the United States and Israel be “subdued” first.

Market focus on central bank response

Investors are now questioning whether global economies are returning to conditions similar to 2022, when central banks launched an aggressive tightening cycle.

The US Federal Reserve is scheduled to announce its monetary policy decision on Wednesday, followed by the European Central Bank, the Bank of England, and the Bank of Japan the next day.

These banks are widely expected to keep interest rates unchanged, but investors will focus on any signals regarding how policymakers plan to deal with the impact of the war in the Middle East.

Antje Praefcke, currency analyst at Commerzbank, said she believes central banks will closely monitor inflation expectations as a lesson from the previous price shock, adding that they may move more quickly compared to the period following the coronavirus pandemic.

Market pricing currently suggests expectations of about two interest rate hikes by the European Central Bank in 2026, a major shift from earlier expectations that pointed to potential rate cuts. Expectations for Federal Reserve rate cuts have also been reduced, with markets now pricing only about a 25-basis-point cut this year.

Paul Mackel, head of global FX research at HSBC, said the situation is different from 2022 at the start of the Russia-Ukraine war, noting that the dollar was then supported by additional factors such as US monetary tightening and weak global growth, which are currently absent.

Major currency moves

The euro rose 0.1% to $1.1515 after falling to $1.1409 on Monday, its lowest level since August 2025. Mackel expects the euro/dollar pair to trade in a range between 1.10 and 1.12 if energy supply constraints in the Gulf persist.

In Germany, investor sentiment declined more than expected in March, recording its largest drop since February 2022.

The Japanese yen rose to 159.03 against the dollar, approaching the key 160 level despite verbal warnings from Japanese authorities, after falling more than 2% since the outbreak of the war at the end of February.

Bank of Japan Governor Kazuo Ueda said core inflation is accelerating toward the bank’s 2% target, stressing that price increases must be accompanied by strong wage growth.

Barclays analysts believe that continued high oil prices, a prolonged closure of the Strait of Hormuz, and an accommodative monetary stance by the Bank of Japan could push the dollar/yen pair to test the 160 level and then the intervention zone seen in 2024 around 161.

Japanese Finance Minister Satsuki Katayama confirmed that the government is ready to take decisive action to address volatility in foreign exchange and financial markets.

Meanwhile, the Australian dollar rose 0.2% to $0.7086 after the Reserve Bank of Australia raised interest rates in a closely split vote.

Gold prices rose in European trading on Tuesday for the first time in the past five days, attempting to recover from a four-week low, supported by buying activity around the $5,000 per ounce level and by a decline in the US dollar in the foreign exchange market.

The Federal Reserve’s monetary policy meeting begins later today, with decisions scheduled to be announced on Wednesday. Expectations remain stable for interest rates to remain largely unchanged for the second consecutive meeting.

Price Overview

Gold prices today: gold rose 0.75% to $5,044.53, up from the session opening level of $5,006.27, after hitting a low of $4,994.77.

At Monday’s settlement, gold lost 0.3%, marking its fourth consecutive daily loss and recording a four-week low of $4,967.61 per ounce.

US dollar

The dollar index fell about 0.2% on Tuesday, extending losses for the second consecutive session and moving away from a ten-month high of 100.54 points, reflecting a decline in the US currency against a basket of global currencies.

Beyond profit-taking sales, the US dollar is weakening as investors refrain from building new long positions ahead of the anticipated Federal Reserve meeting.

US interest rates

Amid rising oil prices, US President Donald Trump again called on Federal Reserve Chair Jerome Powell to cut interest rates.

According to the CME FedWatch tool from CME Group, markets price a 99% probability that US interest rates will remain unchanged this week, while the probability of a 25-basis-point rate cut stands at 1%.

Markets also price a 97% probability that interest rates will remain unchanged at the April meeting, while the probability of a 25-basis-point rate cut stands at 3%.

Federal Reserve

The Federal Reserve’s monetary policy meeting begins later today, with decisions to be announced on Wednesday. Expectations remain stable for interest rates to remain largely unchanged at the 3.75% range, which is the lowest level in three years, for the second consecutive meeting.

Monetary policy data, quarterly economic projections, and comments from Jerome Powell will undoubtedly provide stronger clues about the path of US interest rates over the course of this year.

Gold outlook

Bob Haberkorn, chief market strategist at RJO Futures, said that as oil prices rise, inflation increases, and if inflation rises, central banks will not be as willing as they were six months ago to cut interest rates, which is a negative factor for gold prices.

Haberkorn added that he remains very optimistic about gold given current global developments, noting that there is still significant capital waiting for the right opportunity to enter the market, and he continues to expect gold to reach $6,000 per ounce.

SPDR fund

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, declined on Monday by about 0.85 metric tons, marking the third consecutive daily decline and bringing the total to 1,070.71 metric tons, the lowest level in a week.

The Australian dollar rose in Asian trading on Monday against a basket of global currencies, extending its gains for the second consecutive day against its US counterpart, after the Reserve Bank of Australia raised its benchmark interest rate for the second consecutive month, citing the need to increase borrowing costs to curb inflation.

The decision to raise Australian interest rates came after a very close vote within the Reserve Bank of Australia, indicating that any further tightening may be difficult.

Markets had been pricing in a rate hike after senior officials at the Reserve Bank of Australia warned that the meeting would be “open to all possibilities,” with core inflation remaining at 3.4%, still significantly above the central bank’s target range of 2% to 3%.

Price Overview

Australian dollar exchange rate today: the Australian dollar rose 0.35% against its US counterpart to 0.7095, from the session opening level of 0.7071, after recording a low of 0.7064.

The Australian dollar ended Monday’s trading up 1.3% against the US dollar, marking its third consecutive daily gain.

Reserve Bank of Australia

In line with expectations, the Reserve Bank of Australia’s monetary policy committee decided on Tuesday to raise the benchmark interest rate by 25 basis points to 4.10%, the highest level since April 2025, marking the second consecutive rate hike.

Five board members voted in favor of the increase, while four voted against it, making it the closest decision since voting outcomes began to be disclosed.

The Reserve Bank of Australia said that higher borrowing costs are needed to curb inflation, although the very close vote indicates that further monetary tightening is not guaranteed.

The Reserve Bank of Australia added that developments in the Middle East remain highly uncertain; however, across a wide range of possible scenarios, they could contribute to both global and domestic inflation.

The Reserve Bank of Australia confirmed that a wide range of data in recent months shows that inflationary pressures have increased significantly in the second half of 2025. The board noted that there is a significant risk that inflation could remain above target for longer than expected.

Australian interest rates

Markets price the probability of the Reserve Bank of Australia raising interest rates by 25 basis points in May at around 60%, while the probability of a 25-basis-point hike in June stands at 85%.

To reassess these expectations, investors are awaiting further data on inflation, unemployment, and wage levels in Australia.