RBA rate hike probability doubles as Middle East conflict spikes global oil prices

Iran has escalated drone and missile strikes against the United Arab Emirates, marking a significant expansion of regional hostilities. Concurrently, US forces have conducted retaliatory bombardment of Iranian targets for the tenth consecutive night, indicating a sustained and deepening military engagement. The US claims significant degradation of Iranian missile capabilities, though this remains difficult to independently verify.

Iranian forces have directly targeted US installations in the Gulf, while Houthi rebels have declared a Red Sea blockade, threatening critical maritime chokepoints. Concurrently, Kuwaiti desalination and energy infrastructure have been struck by unconfirmed belligerents, and Indian refiners have suspended Iraqi crude loadings via the Strait of Hormuz due to security risks. The situation indicates a significant escalation in regional hostilities with high confidence, though the attribution for the Kuwaiti attacks and the full extent of Houthi blockade implementation remain uncertain.