Oil Price Plunge Sets Stage for Choppy US Session Amid Fed Rate Decision

US markets got off to a choppy start on Monday, led by a sharp drop in oil prices. WTI crude plummeted 7.5% to $82.61 a barrel after President Donald Trump's comments about talks with Iran sparked concerns over global energy supplies.

The sudden slide in oil has significant implications for inflation and the Federal Reserve's interest rate decision, which is expected later this week. With inflation still a top concern, even a slight easing of near-term pressures can shift the central bank's stance on monetary policy.

ING notes that despite the sharp drop in oil prices, there's still limited explanation from the US side and no significant rise in vessel flows through the Strait of Hormuz. This has left traders balancing two key questions: will cheaper crude ease near-term inflation enough to make the Fed sound less restrictive, and will this week's earnings reports from companies like Microsoft, Apple, Amazon, and Meta change the growth picture more than policy does?