Oil spikes, markets jitter
U.S. oil prices have climbed sharply — up more than 70% over the past year — and crude recently topped $100 a barrel after the U.S.'s blockade posture and tariff threats helped lift prices. ( ) That rise has pushed traders to increase bets on further central-bank rate hikes as failed U.S.–Iran talks and higher energy costs add upward pressure on inflation, even as some forecasters argue the global economy is more resilient than in past shocks. ( )
U.S. oil jumped back above $100 a barrel on April 13, pushing bond yields higher and reviving bets that central banks may keep rates elevated. (investinglive.com) InvestingLive reported West Texas Intermediate crude was up 8% to $104.10 on Monday after U.S.-Iran talks in Islamabad collapsed over the weekend. Financial Times market data later showed West Texas Intermediate at $97.68, still up 60.24% from a year earlier. (investinglive.com; ft.com) Bloomberg reported the U.S. blockade order applies to vessels entering or leaving Iranian ports and took effect at 10 a.m. New York time on Monday. The Indian Express said the U.S. military later framed the move more narrowly than President Donald Trump’s earlier blockade threat, in part to limit a wider oil panic. (bloomberg.com; indianexpress.com) Oil matters to markets because it feeds directly into gasoline, diesel, shipping and factory costs, and those costs can keep consumer inflation from cooling. Reuters said the rise in crude has already become part of a broader debate over whether Wall Street is underestimating the hit to profits and prices. (msn.com; bloomberg.com) Rate markets moved with it. Charles Schwab said on April 13 that traders cut the odds of no change at the Federal Reserve’s April meeting to 96% from nearly 100% late last week, leaving a 3.6% implied chance of a rate hike, while CME FedWatch continued to show policy probabilities shifting with fed-funds futures. (schwab.com; cmegroup.com) Federal Reserve officials have also started warning that the oil shock could slow progress toward the central bank’s 2% inflation target. Reports on comments from Chicago Fed President Austan Goolsbee and San Francisco Fed President Mary Daly both said higher energy prices were complicating the inflation outlook. (msn.com; aol.com) The economic risk runs beyond the United States because the Strait of Hormuz is a major shipping lane for oil and gas. The Peterson Institute for International Economics said roughly one quarter of the world’s oil moves through Hormuz, while Bloomberg said Asian economies are especially exposed because of their dependence on imported energy. (piie.com; bloomberg.com) Some forecasters still argue this shock may not produce the kind of recession seen in earlier oil spikes. Bloomberg reported that economists see a higher recession bar this time because households, banks and many large economies entered 2026 in better shape than during past energy crises. (bnnbloomberg.ca) For now, the market is trading the immediate squeeze: pricier crude, firmer yields and less confidence that rate cuts are close. As long as oil stays near triple digits, every inflation report and central-bank meeting will land harder. (investinglive.com; schwab.com)
