Iran Conflict Sends Oil Prices Swinging Wildly Ahead of Fed Meeting

Oil prices have been swinging wildly over the past six months due to the ongoing conflict in Iran. Brent, the global oil benchmark, rose almost two-thirds from $72.48 a barrel on February 28 to nearly $120 in late April before falling back as diplomatic efforts eased fears of a prolonged disruption to global supplies.

The prices were pulled between geopolitical risk and hopes of a return to normal oil flows with every development in the conflict feeding through to prices. The tensions eased supply fears, pulling prices lower, but renewed tensions sent them higher again.

Despite the recent decline, analysts predict the Federal Reserve will maintain its key interest rates at its next meeting in September. However, the war in Iran has complicated matters as high energy prices have kept inflation elevated.

Konstantinos Chrysikos, head of customer relationship management at financial services firm Kudo, said markets will closely monitor further diplomatic developments and that any setback could quickly push prices to the upside at a time when the market remains tight.