US-Iran Stalemate Sends Oil Prices Soaring
Oil prices rose on Tuesday as negotiations between the US and Iran over a peace deal stalled. The Strait of Hormuz, a crucial waterway for oil shipments, has been closed due to hostilities in the Gulf. Brent crude futures increased to $88.09 per barrel, while US crude futures rose to $82.52.
Tony Sycamore, a market analyst at IG, said 'We're now in a bit of a Mexican standoff' as both sides wait for each other to blink first. This could lead to a prolonged period of uncertainty and higher oil prices, with the market possibly sitting between $75 and $95 per barrel.
The renewed climb in fuel costs adds pressure on the US inflation outlook ahead of Wednesday's consumer price report. A hot print could drive interest rate expectations and worries about stagflation. Jonas Goltermann, chief markets economist at Capital Economics, said 'Our assessment remains that the US economy is running a bit hotter than a 'Goldilocks' situation,' indicating higher interest rates.