Oil Prices Retreat as Inflation Fears Drive Up Interest Rate Hopes

Oil prices retreated from a four-month high on Friday after surging due to Gulf tensions and inflation concerns. Brent crude hit $109.97 a barrel but soon fell 2.9% to $104.49.

The Consumer Price Index rose 0.4% last month, boosting expectations for an interest rate hike from the Federal Reserve next week. Markets now see about an 85% chance of a quarter-point hike, up from around 67% prior to the data.

Despite oil prices dipping, bond yields remained elevated due to inflation fears. The benchmark 10-year Treasury yield was slightly higher at 4.96%, its highest in almost three years.