Tariff Threats Weigh on Risk Assets as Oil Surges on Middle East Supply Concerns

Market sentiment has turned cautious as trade policy uncertainty takes center stage, with cryptocurrency and equities facing headwinds while energy markets rally. Bitcoin slipped below $95,000 as investors reassess risk exposure amid escalating tariff rhetoric, while broader equity futures reflect concerns about the macroeconomic backdrop for 2025.

Oil prices have climbed above $100 per barrel, driven by a combination of rising U.S. production activity and geopolitical tensions in the Middle East. Recent drone strikes targeting Saudi Arabia's critical pipeline infrastructure and elevated supertanker rates in the Gulf region have underscored supply vulnerabilities, offsetting demand concerns tied to potential trade disruptions and slower global growth.

The dollar has strengthened on expectations of higher U.S. interest rates, with core inflation data coming in hotter than anticipated and pushing 10-year yields toward 5 percent. This tightening bias has pressured risk assets broadly, though it has supported commodity prices denominated in dollars and lifted energy markets where supply-side risks remain elevated.