Crude oil advanced Monday while cryptocurrency and precious metals declined, as global markets positioned ahead of Wednesday's Federal Reserve rate decision.
Brent crude rose 2.75% to $107.48, and West Texas Intermediate gained 2.51% to $102.56. Bitcoin, gold, silver, and copper all moved in the opposite direction.
Supply Disruptions Drive Oil Higher
Saudi Arabia's East-West pipeline was damaged by drone strikes originating from Iraq late last week. The pipeline allows the kingdom to export oil without routing through the Strait of Hormuz. Reuters reported the outage threatens up to 4% of global oil supply.
Additional attacks compounded the squeeze. Yemen's Houthis launched fresh strikes on Saudi territory and conducted an attack on a vessel in the Hormuz Strait. The group also reached Perim island on Friday, strengthening their position near Bab el-Mandeb, a corridor that carries 4% to 5% of global oil supply.
Crude gained 8% on the week and cleared $100 for the first time since July, extending a rally that began in that month. Gulf states and Iran had planned talks in Oman on Monday to address tensions, but Omani Foreign Minister Badr Albusaidi said the meeting was postponed.
Fed Rate Expectations Pressure Crypto and Metals
Higher-than-expected U.S. inflation data increased the likelihood of additional Federal Reserve tightening. Market participants now price in an 86.3% probability that the Fed will raise its target rate to 375-400 basis points, up from 59.4% a week earlier and 33.9% a month ago.
Cryptocurrency markets felt the impact. Total market capitalization fell 4.32% to $2.62 trillion over 24 hours. Bitcoin traded near $76,718 after a 4.4% decline for the week. Ethereum slipped 1.79% to $2,478.43.
Precious metals provided no protection. Gold eased 0.22% to $4,340.58, silver lost 0.25% to $64.11, and copper dropped 1.08% to $6.40.
Oil continues to trade on supply concerns while crypto and metals respond to interest rate expectations. The Fed's Wednesday announcement may clarify whether these diverging forces persist.
