Oil Price Surge to $105 Per Barrel as Iran Tensions Escalate

The price of oil has surged to $105 per barrel, its highest level since the conflict between the US and Iran began in February. This increase is attributed to the ongoing tensions in the Strait of Hormuz, which have led to a reduction in oil exports from Iran. The escalation of the conflict has given Iran significant leverage ahead of the US midterm elections in November.

According to Robert Armstrong, the economy's resilience to high oil prices may be due to its ability to absorb them without experiencing a slowdown. However, he notes that national average gas prices have increased significantly, with unleaded gas now costing $4.27 per gallon and diesel reaching $6 per gallon. This has put pressure on consumers and could potentially impact the economy.

The US Federal Reserve's inflation data shows that factory gate prices, or PPI, have risen above target levels. This supports the prediction of a rate hike next week, with both Katie Martin and Robert Armstrong betting that the Fed will raise interest rates down the curve. Meanwhile, the European Central Bank has raised its benchmark interest rate by 0.25%, with ECB president Christine Lagarde stating that it was a 'no-brainer' decision.