Oil Prices Soar Amid US-Iran Tensions and Weakened Rate Hike Expectations

Oil prices surged on Friday as markets digested new data that dented expectations for a Federal Reserve rate hike next month. The US and European shares fell, with the S&P 500 down 0.17% at 7,785.76 points, while Brent crude oil futures settled at $88.52 a barrel, up 1.67%. The yen strengthened against the greenback to 159.33 after a Reuters report that the Bank of Japan could raise rates as soon as September.

The US consumer sentiment deteriorated in early August due to the rising cost of living caused by the Middle East conflict. A survey showed that US retail sales dropped, supporting gold prices and further reducing expectations of a Federal Reserve rate hike at next month's meeting. The dollar index fell 0.28% to 99.65, with the euro up 0.35% at $1.1567.

Thomas Martin, senior portfolio manager at GLOBALT Investments in Atlanta, attributed some market drivers to various parts of Artificial Intelligence. John Sidawi, senior portfolio manager for fixed income at Federated Hermes, said that markets appear willing to tolerate a significant amount of uncertainty without demanding higher risk premiums, but this equilibrium is unlikely to be permanent.