Oil Surges Past $90 as Fed Rate Hike Odds Climb Amid Inflation Worries

Brent crude oil prices rose above $90 per barrel on August 31 as hostilities between the US and Iran renewed, causing S&P 500 futures to fall by about 0.4% and Nasdaq 100 futures to decline roughly 0.5%. The increase in oil prices added to market pressure on the Federal Reserve's policy decision, with market-implied odds of a September rate hike climbing to 57%, up from around 35% before Fed Chair Kevin Warsh's Jackson Hole remarks.

Warsh had warned that inflation remained above the Fed's 2% objective, citing 12-month PCE inflation of 3.7%. His comments, combined with the rise in oil prices, left futures lower as traders adjusted both energy and Fed-policy assumptions ahead of the September 16 meeting.