Oil Price Surge Sends Rate Hike Expectations Soaring

Expectations for a Federal Reserve rate hike have dropped since the latest inflation report. However, they are spiking again due to the ongoing U.S.-Iran war and rising global oil prices.

The odds of an interest rate increase by September have jumped to 82%, up from 53% last week, according to CME's FedWatch tool.

Traders expect the central bank to keep rates unchanged in their meeting next week, but many believe there will be a hike before the year ends due to higher oil prices and inflation concerns.

The price of Brent crude has climbed about 10% this week, reaching $98 a barrel after topping $100 on Thursday. Higher oil prices can lead to increased transportation, manufacturing, and shipping costs, which often translate into more expensive goods and services for consumers.