Oil Prices Soar Amid Geopolitical Tensions and Weaker US Data

Oil prices surged on Friday as global stocks fell amid geopolitical tensions between the US and Iran. The Brent crude oil futures settled at $88.52 a barrel, up 1.67%, while U.S. futures finished at $82.40, up 1.42%. The rally in oil prices was largely driven by heightened geopolitical risk, with faltering talks to end the Iran war leaving markets on edge.

The US and European shares fell as markets digested new data that dented expectations for a Federal Reserve rate hike next month. Retail sales in July unexpectedly fell 0.6%, signaling softer consumer spending and reducing the likelihood of a Fed rate hike. U.S. consumer sentiment also plummeted, with an estimated reading near 51.0, further undermining rate-hike expectations.

The market reaction was largely driven by the Middle East conflict, which has been weighing on oil prices for weeks. The Strait of Hormuz, a key shipping route, remains vulnerable to supply disruptions, pushing Brent crude above $90 a barrel in mid-July and contributing to further gains this week. As tensions continue to rise, investors remain cautious, with some experts warning that markets may be underestimating the potential impact of a major escalation.