Oil Prices Ease Amid US-Iran Ceasefire, Traders Bet on Fed Rate Hike

Oil prices have eased slightly after the US and Iran refrained from launching military strikes in the Persian Gulf for a second straight day. The price of Brent crude oil to be delivered in September dropped by 4.9% to $92.02, following a 3.9% drop on Friday.

The recent surge in oil prices was due to increased fighting in the Middle East and concerns about a return to all-out war, which could further slow the global flow of crude. The Strait of Hormuz, a narrow waterway off Iran's coast, is a critical route for oil shipments, accounting for a fifth of the world's oil exports.

Oil producers have been searching for alternative routes, but those too are under pressure due to attacks on Saudi oil tankers that were using the Red Sea to leave the region. As a result, oil prices have remained elevated, with the average price for a gallon of regular gasoline in the US reaching $4.11 on Sunday.

The reacceleration of oil prices has also led traders to bet on a 36% chance that the Federal Reserve will hike its main interest rate at an upcoming meeting, according to data from CME Group. Higher interest rates could help keep inflation under control but may slow the economy by making borrowing more expensive.