Oil Strike Boosts Rate Hike Odds as Fed Prepares for Key Data Releases
A US military strike on Iranian rocket launchers in the Strait of Hormuz sent Brent crude above $90 a barrel, increasing the odds of a Federal Reserve rate hike in September to 55.7 percent.
The Strait of Hormuz carries approximately 25 percent of the world's maritime crude oil and 19 percent of its liquefied natural gas. The strike provided cover for a rate hike, which had already been considered by some Fed members after Kevin Warsh's ambiguous language at Jackson Hole declared that the central bank might have 'work to do' on inflation.
Exxon posted second-quarter earnings of $14.5 billion and Chevron reported $12.1 billion, with Exxon's chief executive flagging 'challenging conditions' in refining margins.
The Federal Reserve meets September 15-16, and the labor market and inflation data releases on September 5 and 12 will determine whether a rate hike occurs.