OIL Market Update
18 May 2026 • 00:42 GMT
Oil prices continue their sharp rise, reaching around $110.50 per barrel—the highest in over three and a half years. This move is mainly driven by ongoing disruptions in Middle East oil supply, especially through the Strait of Hormuz, and escalating tensions related to Iran. These geopolitical tensions threaten to keep supply tight, with some analysts warning prices could climb even higher, possibly approaching $120 if the disruptions persist.
The impact of higher oil prices is significant for oil-exporting countries like Canada, Russia, and Norway, whose currencies have strengthened against the US dollar. Conversely, nations that rely heavily on importing oil might face increased costs, which could weigh on their currencies.
Meanwhile, the US dollar remains strong, supported by expectations of further interest rate hikes from the Federal Reserve and ongoing risk aversion in global markets. The combination of rising oil prices and a sturdy dollar adds complexity to currency movements and could influence trading strategies. Traders should monitor geopolitical developments and US economic data closely, as these factors will continue to shape the oil and currency landscape in the near term.