Oil Prices Rise Amid Middle East Supply Concerns; Peso Weakens Against Dollar

Brent crude futures gained 1.9% to $110.85 a barrel, and U.S. West Texas Intermediate crude futures added 2.2% to $99.95 by October 21. These gains were attributed to concerns about supply risks in the Middle East. Separately, the Mexican peso weakened against the U.S. dollar, closing 1.3190% higher on October 21. Meanwhile, Iranian Foreign Minister Abbas Araqchi stated that Iran was prepared to defend itself, and President Masoud Pezeshkian said the United States could not expect dialogue while blockading and threatening Iran.

The rise in oil prices reflects geopolitical risk stemming from the Middle East. The weakening of the Mexican peso is linked by some reports to geopolitical risk and the possibility of a narrower interest-rate gap between Mexico and the United States. This occurs as the Federal Reserve raised its federal funds target range to 3.75%-4.00% in September, while the Bank of Mexico held its overnight target rate at 6.50%.

A preliminary U.S.-Iran peace deal was announced as markets watched the Federal Reserve chair's views on inflation, amid efforts to reopen the Strait of Hormuz.