Oil prices holds above US$90 as Iran conflict revives supply fears

OIL prices held near elevated levels on Thursday after rising for a third consecutive session, as investors assessed renewed US-Iran hostilities and efforts to keep crude flowing through the strategic Strait of Hormuz.

Brent crude held above US$95 a barrel, while US crude remained above US$90, after Washington launched fresh strikes on Iranian targets around the strategic waterway following about a month of relative calm.

Iran retaliated with drones and missiles targeting US bases across the Middle East, raising fears that the renewed confrontation could threaten energy supplies and further disrupt global markets.

Despite the escalation, crude shipments continued through the Strait of Hormuz at an estimated average of about eight million barrels a day.

US President Donald Trump said the latest attacks on Iran would be short-lived, while indicating that Washington remained prepared for further strikes and reiterating his claim that the United States controls the waterway.

Oil prices also drew support from US inventory data showing crude stockpiles fell by 4.5 million barrels last week, their first decline since late July.

The US dollar, meanwhile, is expected to remain firm over the coming months before weakening over the next year, according to a Reuters poll of foreign exchange strategists.

The greenback, which has gained about 1.5 per cent so far this year, is being pulled in opposing directions by renewed geopolitical tensions, expectations for Federal Reserve policy and concerns over the US economy.

Interest-rate futures are pricing in two Fed rate hikes this year to contain inflation, which was last reported at nearly twice the central bank’s 2 per cent target.

However, currency strategists have largely maintained their forecasts for a weaker dollar, with the median forecast from an Aug 31 to Sept 2 Reuters poll putting the euro at US$1.16 in three months, US$1.17 in six months and US$1.18 in a year.

"For me, the most important thing is going to be the repricing for the Fed," said Dan Tobon, head of G10 FX at Citi.

"But if the conflict becomes a bigger factor tomorrow and for the next few months the dollar will go up and we're going to be wrong. That's why there’s such a big divergence — it's really hard to know what the main thing driving markets over the next couple of months is going to be."

The dollar index slipped slightly to 99.5 on Wednesday after investors digested weaker-than-expected US employment data.

US private businesses added a net 38,000 jobs in August, the weakest increase since January and below the 47,000 expected, pointing to a cooling labour market.

Despite the weak employment figures, the dollar remained near a two-week high as investors sought safety amid concerns over the economic impact of higher energy prices and diverging monetary policy among major economies.

The benchmark 10-year US Treasury yield also reached a near three-year high of about 4.82 per cent on Sept 2, amid concerns over rising government debt issuance and increased borrowing by companies linked to artificial intelligence.

"There's a story of dollar depreciation over the short- to intermediate-term," said Vincent Reinhart, former Federal Reserve staffer and now chief economist at BNY Investments.

"The Fed is not going to tighten in the way currently priced into markets and the Treasury will be active in trying to keep longer-term yields down. Neither are conducive to dollar assets," he said.

Meanwhile, net long dollar positions held by traders have fallen further from an 11-year high in recent weeks, according to Commodity Futures Trading Commission data. - September 3, 2026