On Wednesday, Iranian vessels loaded with explosives attacked two oil tankers in Iraqi waters, causing Brent crude prices to rise above $100 per barrel, while Bitcoin fell by 2% to $69,527. The Middle East conflict has now lasted 13 days, intensifying concerns over energy supply, despite a record release from the International Energy Agency (IEA).
The UK military's UK Maritime Trade Operations confirmed the attack, which occurred 5 nautical miles south of Basra, Iraq. Iraqi officials reported that one crew member was killed and 38 were rescued, labeling the incident as a "despicable act of sabotage" that infringed on Iraq's sovereignty.
Following the attack, Brent crude prices surged by as much as 10.5%. Since the onset of the war between the US and Israel against Iran on February 28, oil prices have risen by approximately 50%.
The IEA's record release of 400 million barrels failed to curb oil prices.
The US has pledged to release 172 million barrels from its Strategic Petroleum Reserve. Countries including Japan, the UK, South Korea, Germany, and Austria have also contributed.
Bitcoin has dropped to $69,527 as risk aversion returns.
Arthur Hayes, co-founder of BitMEX, presented a contrarian view. He believes the conflict will force the Federal Reserve to "lower prices and increase the money supply" to fund war-related deficit spending, creating favorable conditions for Bitcoin.
Counterpoint: Sustained oil prices above $100 will dampen rate cut expectations. With inflation concerns driven by rising oil prices, federal funds futures have priced in a less than 1% chance of a rate cut on March 18.
Oil price volatility impacts cryptocurrency outlook.
Trump stated on Truth Social that the surge in oil prices is a "small price to pay for the safety and peace of America and the world." The market has fluctuated sharply due to his contradictory signals, with oil prices swinging between $85 and $120 over the past week.
The Iranian Revolutionary Guard has threatened to target energy facilities in the Gulf region, warning that if the US and Israel "continue this game," oil prices could reach $200 per barrel. Qatar's energy minister warned that all Gulf oil-producing countries might declare force majeure.