US-Iran War Sends Oil Prices Soaring, Boosting Fed Hike Expectations

The recent flare-up in the US-Iran war has led to increased expectations of an interest rate hike by the Federal Reserve. According to the CME's FedWatch tool, the probability of a rate hike by September now stands at 82%, a 29-point increase from the previous week.

This surge is largely due to the spike in global oil prices, which have climbed about 10% this week despite a small drop on Friday. Brent crude, the international benchmark, traded above $98 a barrel after reaching a high of $100 on Thursday.

Higher oil prices ripple through the economy by increasing transportation and manufacturing costs, often translating into more expensive goods and services for consumers. Energy also plays a significant role in food production, adding to upward pressure on grocery prices.