The euro declined in European trading on Thursday against a basket of global currencies, extending losses for the third consecutive day against the US dollar and approaching a four-month low as investors continued to favor the US currency as a preferred safe-haven asset amid escalating military confrontations in the Middle East.

Global oil prices surged again above $100 per barrel after Iran’s Revolutionary Guard launched attacks on several oil tankers in the Strait of Hormuz, while Tehran warned the world to prepare for oil prices reaching $200 per barrel.

Price Overview

Euro exchange rate today: the euro fell 0.3% against the US dollar to $1.1532, down from the session opening level of $1.1567, after touching a high of $1.1574.

The euro ended Wednesday’s session down 0.4% against the dollar, marking the second consecutive daily loss due to growing speculation about increasing inflationary pressures on policymakers at the Federal Reserve.

US Dollar

The dollar index rose about 0.3% on Thursday, extending gains for the third consecutive session and approaching its highest level in four months, reflecting continued strength in the US currency against a basket of global currencies.

US President Donald Trump said on Wednesday that Washington is in a “very good position” in its war with Iran and that the United States would “pay very close attention to the Strait of Hormuz.”

US Central Command also said in a statement that the US military had “destroyed” 16 Iranian minelaying vessels near the Strait of Hormuz.

Three sources familiar with the matter told Reuters that US intelligence assessments indicate Iran’s leadership remains largely intact and is not at risk of collapse anytime soon after nearly two weeks of sustained US and Israeli bombing.

Global oil prices

Brent crude surged more than 8% on Thursday, extending gains for the third consecutive day and trading again above $100 per barrel after Iran launched new attacks on oil tankers and energy storage facilities.

Iran’s military leadership announced Wednesday that the world should prepare for oil prices reaching $200 per barrel after three more vessels were attacked in the besieged Gulf.

Analysts said the International Energy Agency’s proposal to release 400 million barrels from strategic reserves — a record amount — is insufficient to calm concerns about supply disruptions from the Middle East.

The Cboe Oil Volatility Index rose sharply on Wednesday to 121.01 points, its highest level since 2020 at the start of the COVID-19 pandemic, after the index increased in seven of the past eight trading sessions since the current crisis began.

Opinions and analysis

Rodrigo Catril, currency strategist at National Australia Bank in Sydney, said: “President Trump continues to say — even overnight — that the war will end soon. It is not clear to us whether that is really within his control.”

Catril added that energy price volatility is likely to persist: “The Strait of Hormuz is not only about oil — it also involves liquefied natural gas and fertilizers. The longer shipping remains disrupted, the greater the pressure on prices.”

European interest rates

Money markets are pricing a 5% probability that the European Central Bank will cut interest rates by 25 basis points at the March meeting.

However, amid rising global energy prices, data from the London Stock Exchange Group suggests the European Central Bank is now expected to raise interest rates in June.

To reassess these expectations, investors are awaiting further economic data from the eurozone on inflation, unemployment, and wage growth.

The Japanese yen declined in Asian trading on Thursday against a basket of major and minor currencies, extending losses for the third consecutive day against the US dollar and hitting a two-month low as investors continued buying the US currency as a preferred safe-haven asset amid escalating military confrontations in the Middle East.

Global oil prices surged again above $100 per barrel after Iran’s Revolutionary Guard launched attacks on several oil tankers in the Strait of Hormuz, while Tehran warned the world to prepare for oil prices reaching $200 per barrel.

Despite growing speculation about accelerating inflationary pressures on policymakers at the Bank of Japan, the probability of a Japanese interest rate hike before September remains weak, as investors await further data on developments in the world’s fourth-largest economy.

Price Overview

Japanese yen exchange rate today: the US dollar rose against the yen by 0.2% to ¥159.24, the highest level since January 14, up from the session opening at ¥158.94, after touching a low of ¥158.78.

The yen ended Wednesday’s session down about 0.6% against the dollar, marking the second consecutive daily loss amid intensifying military clashes in the Middle East.

US Dollar

The dollar index rose about 0.3% on Thursday, extending gains for a third consecutive session and approaching its highest level in four months, reflecting continued strength in the US currency against a basket of global currencies.

US President Donald Trump said on Wednesday that Washington is in a “very good position” in its war with Iran and that the United States would “pay very close attention to the Strait of Hormuz.”

US Central Command also said in a statement that the US military had “destroyed” 16 Iranian minelaying vessels near the Strait of Hormuz.

Three sources familiar with the matter told Reuters that US intelligence assessments indicate Iran’s leadership remains largely intact and is not at risk of collapse anytime soon after nearly two weeks of sustained US and Israeli bombing.

Global oil prices

Brent crude surged more than 8% on Thursday, extending gains for the third consecutive day and trading again above $100 per barrel after Iran launched new attacks on oil tankers and energy storage facilities.

Iran’s military leadership announced Wednesday that the world should prepare for oil prices reaching $200 per barrel after three more vessels were attacked in the besieged Gulf.

Analysts said the International Energy Agency’s proposal to release 400 million barrels from strategic reserves — a record amount — is insufficient to calm concerns about supply disruptions from the Middle East.

Japanese interest rates

Markets are pricing a 5% probability that the Bank of Japan will raise interest rates by a quarter point at the March meeting, while the probability of a similar hike at the April meeting stands at 35%.

In the latest Reuters poll, economists expect the Bank of Japan to raise interest rates to 1% by September.

Analysts at Morgan Stanley and Mitsubishi UFJ Financial Group wrote in a joint research report that they had previously viewed the chances of a rate hike in March or April as low, but the rising uncertainty stemming from developments in the Middle East is likely to push the Bank of Japan toward a more cautious stance, further reducing the likelihood of near-term rate hikes.

To reassess these expectations, investors are awaiting additional data on inflation, unemployment, and wages in Japan.

Ethereum rose slightly during Wednesday’s trading as risk appetite remained under pressure due to ongoing concerns about the war between the United States and Iran, while markets also assessed the latest US inflation data.

The move followed comments by US President Donald Trump suggesting that the war with Iran could end soon, stating that there were no longer any targets left for the US military to strike.

He also warned Iran that it would face an unprecedented attack if Tehran attempted to lay naval mines in the Strait of Hormuz.

Meanwhile, the International Energy Agency announced that member states had agreed to release 400 million barrels from their strategic oil reserves to address supply shortages caused by the Iran war, marking the largest coordinated release in the agency’s history.

In a separate development, data released today showed that the US consumer price index rose 2.4% year-on-year in February, in line with economists’ expectations surveyed by Dow Jones.

Ethereum

In trading, Ethereum rose on the CoinMarketCap platform by 1.2% to $2,067.5 as of 21:02 GMT.

Oil prices have always been difficult to predict, and the market has repeatedly proven unforgiving toward those who assume too much certainty. By the end of 2025, the prevailing outlook pointed to an oil supply surplus in 2026. Several major banks and analytical agencies expected global production to exceed demand by millions of barrels per day, with forecasts from JPMorgan Chase suggesting Brent crude could fall to around $60 per barrel by mid-2026.

However, the situation changed rapidly. As tensions escalated in the Middle East and commercial shipping through the Strait of Hormuz was disrupted, US West Texas Intermediate crude climbed above $110 per barrel, its highest level since the price shock of 2022 following Russia’s invasion of Ukraine. This surge occurred as markets reacted to an actual disruption rather than a mere possibility.

Three real constraints now shape the direction of oil prices: spare production capacity, demand elasticity, and the limits of policy intervention.

Spare capacity versus the Strait of Hormuz

The first constraint is global spare production capacity. By the end of 2025, effective spare capacity ranged between 3 and 4 million barrels per day, almost entirely concentrated in Saudi Arabia and the UAE. Under normal conditions, this capacity helps stabilize prices during temporary disruptions. However, with roughly 20 million barrels per day passing through the Strait of Hormuz, this buffer covers only a small fraction of the supply at risk. In other words, spare capacity alone cannot offset a systemic disruption in such a strategic chokepoint.

The demand breaking point

Oil demand is relatively inelastic in the short term. People continue driving, trucks continue delivering goods, and airplanes keep flying. But when prices rise significantly, behavior begins to change. Consumers drive less, companies reduce discretionary travel, and economic growth slows. Historically, West Texas Intermediate reached $147 per barrel in 2008 before the global economy entered recession. Many analysts now consider $120 per barrel the modern “recession threshold,” where energy costs begin to meaningfully affect spending and economic activity.

The strategic petroleum reserve: a stabilizer, not a solution

Policy tools can influence prices, but their impact is limited. The United States currently holds about 415 million barrels in the Strategic Petroleum Reserve, far below its peak of more than 700 million barrels about 15 years ago. Coordinated releases from this reserve can help ease short-term disruptions, but they cannot compensate for major bottlenecks such as those involving the Strait of Hormuz.

Defining the possible scenarios

Limited disruption ($90–$110 per barrel): If disruptions remain temporary and shipping resumes quickly, the current price spike may ease as the expected 2026 supply surplus returns.

Structural shock ($110–$130 per barrel): If disruptions persist for several weeks, such as tanker attacks or damage to infrastructure, the market will begin pricing in sustained supply risk.

Severe disruption (above $140 per barrel): This would require major escalation, such as significant damage to processing facilities in Saudi Arabia or the UAE, forcing global markets to compete aggressively for physical oil supplies.

The likely path forward

Oil markets are ultimately self-correcting, as higher prices eventually reduce demand. However, that adjustment process can be painful and may take time. The real question is not whether prices can rise further — history shows they can — but how long global economies can sustain such levels before demand begins to rebalance and what the broader economic consequences will be.