The US dollar rose against major currencies on the 7th as renewed vessel attacks in the Strait of Hormuz and US sanctions on Iranian oil drove crude prices higher. The dollar index (DXY) climbed 0.190% to 101.056 at 4pm ET, while Brent crude September delivery surged 3.01% to close at $74.16 per barrel. The UK Maritime Trade Operations (UKMTO) reported three vessel attacks in the Strait of Hormuz within 24 hours, prompting the Joint Maritime Information Centre (JMIC) — operated by a 47-nation naval coalition — to elevate the maritime threat level from 'substantial' to 'critical'. The US Treasury's Office of Foreign Assets Control (OFAC) announced the revocation of a general license that had permitted Iranian oil and petroleum product sales through the 21st of next month, citing the escalating tensions. Saxo Bank analyst Ole Hansen noted that the Hormuz incidents are 'putting some geopolitical risk premium back into prices,' serving as the primary driver of market buying interest.
Hormuz Strait Attacks Trigger Dollar Rally
The UKMTO announced on the 7th that a tanker passing through the Strait of Hormuz 'was attacked by an unidentified unmanned aerial vehicle (drone/UAV) and sustained minor structural damage'. According to UKMTO, three vessels in total — including tankers from Qatar and Saudi Arabia — were attacked within the past 24 hours. Iranian spokesperson Esmail Baghaei effectively acknowledged the attacks, stating that 'some merchant vessels used routes not coordinated with Iran while turning off or manipulating their Automatic Identification Systems (AIS) to evade detection by surveillance and safety systems'. The JMIC elevated the maritime threat level for the Strait of Hormuz from 'substantial' to 'critical', indicating a very high likelihood of attacks occurring. JMIC stated that 'the recently identified incidents demonstrate that the threat environment remains elevated and suggest that extreme vigilance is required'.
The USD-JPY exchange rate stood at 162.078 yen at 4pm ET on the 7th, up 0.024 yen (0.015%) from the previous New York close of 162.054 yen. The EUR-USD rate fell 0.00248 dollars (0.217%) to 1.14166 dollars. Bank of Japan (BOJ) Policy Board member Toichiro Asada, known for dovish leanings, said on the 7th that price pass-through from high oil prices is proceeding at a 'relatively fast pace', adding 'I am not always opposed to rate hikes'.
US Revokes Iranian Oil Sales License
The US Treasury reimposed sanctions on Iranian crude oil. OFAC announced the revocation of a general license that had allowed the sale of Iranian crude oil and petroleum products for 60 days through the 21st of next month. The move came as tensions between the United States and Iran escalated following the Hormuz incidents.
Oil Prices Surge on Supply Disruption Risk
Brent crude September delivery closed at $74.16 per barrel, up 3.01% from the previous session. The dollar index broke through the 101 level in tandem with the oil price rally. Saxo Bank analyst Ole Hansen, referencing the Hormuz vessel attacks, explained that 'it is putting some geopolitical risk premium back into prices — not as large as what we've seen in the past, but it is the main driver leading market buying interest'. The GBP-USD rate fell 0.00304 dollars (0.227%) to 1.33614 dollars. The offshore USD-CNH rate rose 0.0094 yuan (0.138%) to 6.8036 yuan.
FAQ
What caused the dollar to rise on the 7th?
The dollar rose on the 7th due to three vessel attacks in the Strait of Hormuz within 24 hours, the US Treasury's revocation of a general license permitting Iranian oil sales through the 21st of next month, and a 3.01% surge in Brent crude prices to $74.16 per barrel.
What action did the Joint Maritime Information Centre take regarding the Strait of Hormuz?
The JMIC, operated by a 47-nation naval coalition, elevated the maritime threat level for the Strait of Hormuz from 'substantial' to 'critical' on the 7th, indicating a very high likelihood of attacks and stating that 'extreme vigilance is required'.
