Geopolitical Tensions in Middle East Escalate, Driving Oil Prices Higher and Reviving Inflation Concerns

Renewed military confrontations between the US and Iran, including fresh strikes, have disrupted the Strait of Hormuz, a critical global energy chokepoint. This escalation has led to a surge in crude oil prices and reignited fears of energy-driven inflation, prompting traders to price in a nearly 90% chance of an additional Federal Reserve interest rate hike this year. Gold prices have also declined due to a stronger US Dollar and elevated Treasury yields, as safe-haven demand shifts.