Oil Surges to $116 on Kharg Island Threat; USD Rallies as Global Markets Plunge

Brent crude has surged to $116.71 per barrel, retesting early-war highs, after reports that the U.S. administration threatened seizure of Iran's Kharg Island — a critical oil export terminal handling roughly 90% of Iranian crude shipments. The escalation has triggered a broad market sell-off, with equities plunging and the U.S. dollar rallying sharply as investors flee to safety. The dollar index is firmly bid, supported by both safe-haven flows and rising U.S. rate expectations as energy-driven inflation threatens to delay any Federal Reserve easing. Commodity-linked currencies present a mixed picture: CAD and NOK could benefit from higher oil revenues, while energy-importing nations' currencies like JPY, EUR, and INR face headwinds from deteriorating terms of trade. Key levels to watch include Brent crude resistance at the $120 psychological barrier, which if breached could trigger another wave of risk-off positioning. For forex traders, USD strength is likely to persist as long as geopolitical uncertainty remains elevated, with USD/CHF and gold also reflecting intense safe-haven demand.