Oil Prices Soar as US Strikes Iran, Stocks Fall
The US military's latest actions against Iran have sent shockwaves through global markets. On Monday, oil prices surged after the US launched airstrikes on Iranian rocket launchers in the Strait of Hormuz, a key shipping route that accounts for about 20% of the world's oil shipments.
As a result, the price of Brent crude, the international standard, rose 2.8%, to $90.58 per barrel. The national average for gasoline in August has been above $4 per gallon every day of the month for the first time ever, according to the AAA.
The increase in energy prices due to the war with Iran has contributed to stubbornly high inflation, which is weighing on household spending and consumer confidence. The rate of inflation remains well above 3%, far beyond the Fed's 2% target.
Despite this, Wall Street expects the Federal Reserve to raise interest rates at least once before the year ends in an effort to cool inflation. On Friday, Fed Chair Kevin Warsh said that inflation is still too high and suggested a rate hike might be necessary in the coming months.