Oil Surge Revives Inflation Fears, Rate Hikes Loom

Global stocks slipped on Monday due to escalating tensions between the US and Iran, which pushed oil prices to a seven-week high near $98 per barrel. The increase in Brent crude futures is nearly 1.5% and has raised concerns about inflation and interest rate hikes by major central banks.

The European Central Bank (ECB) is expected to raise its policy rate to 2.75% on Thursday, with a 75% probability of another increase to 3% by December. The Bank of Japan (BOJ) may also raise rates by 25 basis points at its September 18 meeting, with a 60% probability of another increase by December.

Stronger-than-expected employment figures in the US have raised expectations of tighter monetary policy, with markets pricing in a 58% probability that the Federal Reserve will raise rates when it meets on September 16. The probability of a hike by October stands at 70%.