Oil Prices Fluctuate as Traders Parse Middle East Developments

By Ronnie Harui

Oil prices fluctuated in Asian trading Friday morning as traders parsed developments in the Middle East conflict, while government bonds retreated on growing concerns about tighter monetary policy.

Iran-backed Houthi militants seized the port city of Mokha on Yemen's west coast Thursday, The Wall Street Journal reported, citing Yemeni and Saudi officials. The move increases their control near the Bab al-Mandeb chokepoint for energy exports through the Red Sea.

The militants' seizure of Mokha followed days of intense fighting with Saudi-backed Yemeni government forces in a conflict that has intensified since early July. Earlier this week, the Houthis attacked Saudi Arabia's southern energy facilities and a military base with a large missile-and-drone attack.

"The Iranian-backed Houthi militants have advanced towards Red Sea coastal areas, with reports that they have captured the port city of Mokha," ANZ Research analysts said in a report. "This could give the group a foothold, which could enable them to almost fully control the Bab al-Mandeb Strait," the analysts added.

Front-month West Texas Intermediate crude oil futures were recently 0.1% lower at $102.36 a barrel after swinging between a 1.9% gain and a 0.2% loss, ICE data showed. Front-month Brent crude oil futures were 0.1% lower at $107.48 a barrel after also fluctuating between gains and losses.

Government bond prices across Asia-Pacific fell on fears that rising oil prices could prompt central banks worldwide to raise interest rates more quickly.

"Its been an ugly session for markets," said Skye Masters, head of markets research at National Australia Bank, in commentary. "With central banks in the past week(s) communicating their determination to deliver on their inflation targets, rate-hike expectations have been added to amid a further rise in oil prices," Masters added.

Yields on Australia's 10-year government bonds jumped 13 basis points to 5.3760% after earlier touching 5.3983%, the highest intraday level since May 2011, FactSet data showed. New Zealand's 10-year sovereign debt climbed 15 basis points to 5.0240%, while Japan's 10-year government bonds rose 6.5 basis points to 2.975%.

Bank of Japan policy board member Kazuyuki Masu on Thursday emphasized the need for further interest-rate increases and warned of higher inflation.

"To complete the normalization of monetary policy in Japan, I am convinced that the bank needs to raise the policy interest rate further," Masu said in a speech to business leaders in Fukui Prefecture, central Japan.

"What is most vital from now on is to ensure that the underlying inflation rate does not significantly exceed 2%," he said, adding that trend inflation is getting "very close" to the central bank's target.

Most equity markets in Asia-Pacific fell, tracking Wall Street's losses overnight. South Korea's Kospi dropped 2.6%, Japan's Nikkei Stock Average lost 2.8% and Hong Kong's Hang Seng Index declined 1.3%. Meanwhile, Singapore's FTSE Straits Times Index edged 0.1% higher.

"The main theme was energy-driven risk-off as the Middle East conflict escalated further," Commerzbank Research analysts said in a research report.

--Megumi Fujikawa contributed to this article.

Write to Ronnie Harui at ronnie.harui@wsj.com

(END) Dow Jones Newswires

September 10, 2026 22:15 ET (02:15 GMT)