Middle East Tensions Send Crude Prices Soaring Amid Fed Rate Hike Expectations

Crude oil prices rose on Monday as tensions in the Middle East intensified, with ICE Brent briefly hitting $90 per barrel and WTI trading around $85.50.

The increase was largely driven by concerns over supply flows through the Strait of Hormuz, a key waterway for global energy trade. The U.S.-Iran exchange on Sunday added to fears that a broader confrontation could disrupt shipping and put pressure on global energy markets.

The dollar recovered after Federal Reserve Chair Kevin Warsh's speech at Jackson Hole, with Treasury yields rising across the curve as markets restored odds of a September rate increase. Fed funds futures now price in around 58% to 60% chance of a 25 basis-point rate hike at the September FOMC meeting.