FX.co ★ Yen Extends Fall on Surging Oil Prices

The Japanese yen weakened past 158.5 per dollar on Monday, hitting a six-week low as oil prices climbed above $100 a barrel. The surge in crude was driven by mounting fears that a prolonged conflict in the Middle East could disrupt global energy supplies, putting additional pressure on oil-dependent economies. The US-Israeli war with Iran has entered its second week with no resolution in sight, while major Middle Eastern oil producers have been cutting output and shipments through the Strait of Hormuz remain halted. Japan, which sources about 95% of its oil from the Middle East and receives roughly 70% of those supplies via the Strait of Hormuz, is especially exposed to energy price shocks. In response to the ongoing Iran crisis, the Japanese government is considering drawing on part of its national oil reserves. The yen also faced headwinds from a stronger US dollar, which gained on safe-haven demand and shifting expectations for Federal Reserve policy.