OPEC Tensions Fuel Inflation Fears, Sending Oil Prices Soaring
Oil prices surged on Monday, with Brent reaching $107.54 and WTI $102.93, after a weekend of escalating tensions in the Middle East. The Strait of Hormuz, Bab el-Mandeb, and Saudi Arabia's alternative export infrastructure are all under pressure.
The Salalah meeting to discuss a temporary Hormuz shipping framework was postponed, removing an anticipated opportunity for de-escalation. Maritime incidents continued to threaten shipping, including a vessel struck by a projectile in the Strait of Hormuz on Sunday.
Higher energy costs have intensified inflation concerns, leading to increased expectations that the Fed will hike interest rates. Futures markets assign approximately 90% probability to Wednesday's increase and price around four cumulative hikes by the end of July 2027.