US crude oil hits $100 for the first time since May

Oil prices surged again on Thursday, with Brent crude surpassing $105 per barrel for the first time since May, as markets brace for a prolonged U.S. war with Iran.

U.S. crude oil also jumped sharply and hit $100 per barrel, also its highest level since Mid-May.

A primary driver of the move in oil prices was President Donald Trump’s comment Wednesday night that he is not looking for a deal with Iran. Commodities experts warned earlier this week that oil prices as measured by Brent could rise to $120 or even as high as $150 per barrel if the stalemate with Iran continues to drag on.

Saudi Arabia informed OPEC that its crude oil output plunged to the lowest level since 1990 last month due to renewed hostilities with Iran, according to Bloomberg News. As a result of those rising prices, the national average gas price rose another 5 cents overnight to $4.27. Diesel fuel, which powers everything from farms to trucking to trains, rose 3 cents overnight to $5.97.

Meanwhile, U.S. Treasury bonds continued to sell off, driving their yields higher.

The 10-year Treasury yield, which heavily influences consumer borrowing rates, especially for mortgages, touched 4.9%, its highest level since 2023.

The 30-year Treasury yield spiked to 3.34%, its highest level since 2007.

Reference Sources

1. nbc - U.S. crude oil hits $100 for the first time since May

Treasury Department to buy back $6 billion in longer-term debt, triple the normal level

The US Treasury Department announced on Wednesday that it would buy back $6Bn worth of 10- to 20-year government bonds in an operation aimed at keeping bond markets functioning.

The Much-Anticipated announcement triples the normal buyback operation and follows an announcement on 19 August from Treasury Secretary Scott Bessent that the Department would at least double the normal amount for Already-Issued securities. Though the operation ostensibly is aimed at keeping government debt markets liquid — in this case for 10- and 20-year notes — the extraordinary measure also has been seen as an effort to put a lid on Treasury yields, which had hit highs not seen since prior to the global financial crisis in 2008.

The new Treasury policy has repeatedly faced criticism from Wall Street, with investors warning it could undermine the agency’s credibility and work against the Federal Reserve’s efforts to tame stubbornly elevated inflation.

The bond market, of course, knew better.

Traders quickly deduced that the idea devised by former hedge fund trader and current Treasury Secretary Scott Bessent was an Ill-Advised attempt at lowering yields that for some maturities had reached the highest since 2007, pressuring borrowing costs higher for the government, businesses and consumers.

On Wednesday, the traders were proven right.

The 10-year bond yield surged to as high as 4.85%, its highest level since November 2023.

Reference Sources

1. bloomberg - Bond Traders Shrug Off Bessent’s Buyback Gimmick
2. nbc - Bessent’s move to tamp down rising rates backfires as bond yields jump, stocks tumble
3. cnbc - Treasury Department to buy back $6 billion in longer-term debt, triple the normal level
4. ft - Scott Bessent continues crusade against rising US government bond yields
5. barrons - Yields Rise to New Highs After $6 Billion Treasury Buyback Announcement

Anthropic Investor Leads Funding for Off-Grid AI Power Startup

Austin-based startup Tar, which builds off-grid power systems for data centres, has raised $120M in a Series A funding round led by Spark Capital, an investor in artificial intelligence developer Anthropic PBC.

Prior investors Buckley Ventures and Align Fund also participated in the funding round, which values Tar at around $1Bn.

Tar is designing modular systems consisting of solar, batteries and backup natural gas generators that can power a data centre without connecting to an electric grid.

The company uses automation and robots to speed up deployment times.

Data-Centre developers are increasingly looking to build their own power supplies as they encounter labour shortages, local opposition and long wait times to connect to the grid.

Most of the proposed projects intend to use gas-fired generation, which can offer power around the clock.

Tar’s power systems will use gas only for backup or emergencies, with Renewables and batteries providing the bulk of the energy.

The company is currently building a project that will provide several hundred Megawatts for an undisclosed Data-Centre customer in Texas and has plans for another large development next year.

Reference Sources

1. bloomberg - Anthropic Investor Leads Funding for Off-Grid AI Power Startup

The CommonWealth English daily news digest is a service curated by CommonWealth English team with the help of AI tools.  

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