Brent crude oil prices have rallied above $110 per barrel, with Societe Generale analysts highlighting that this spike is supporting both the US Dollar and bond yields [1]. The rally comes as negotiations with Iran focus on restoring the status quo and reopening the Strait of Hormuz, with the first stage of a potential deal aimed at removing restrictions or tolls on the strategic waterway [1]. Societe Generale notes that President Trump is unlikely to accept Iran’s proposal to end the conflict following meetings with national security officials [1].
The analysts observed that, despite Brent crude returning above $108 per barrel, the USD/G10 currency pairs initially lost ground; however, the overnight surge above $110 per barrel restored support for the dollar and lifted bond yields [1]. Societe Generale warns that further gains in oil prices could trigger profit-taking in risk assets, particularly if prices threaten new highs and undermine equity market momentum [1].
Looking ahead, Societe Generale assumes that oil prices could drop to $70-$80 per barrel by the end of the projection period, though this is presented as an assumption rather than a forecast [1].
CONCLUSION
Brent crude’s rally above $110 per barrel is reinforcing the US Dollar and bond yields, while raising concerns about potential profit-taking in equities if oil prices continue to climb. The ongoing Iran negotiations and uncertainty around the Strait of Hormuz remain key factors influencing market sentiment. Societe Generale anticipates a possible decline in oil prices to $70-$80 per barrel in the longer term.