Oil Surges Above $100 as US-Iran Tensions Escalate

The escalating US-Iran conflict has pushed oil prices above $100 per barrel, reigniting inflation concerns and putting pressure on equities and bonds.

Brent crude climbed to around $110 by Friday, gaining nearly 13% on the week. The higher energy costs are particularly concerning as they can feed directly into inflation, forcing central banks to maintain or raise interest rates.

The US inflation pressures increased with PPI coming in above expectations and pushing markets to price a higher probability of a September Fed rate hike. The ECB raised its 2026 inflation forecast to 3.0%, highlighting the Middle East energy shock's impact on the inflation outlook.