Oil just broke $90. Brent crude rose more than 3% on Monday to its highest level since mid-June, as the US-Iran war chokes shipping through the Strait of Hormuz.
The United States struck Iran for the eighth night in a row over the weekend. Washington has blockaded Iranian ports, and Tehran says the strait is closed to unauthorized ships.
Why is the price of oil rising so quickly?
Brent crude oil traded near $91.40 early Monday, up 3.2%, according to Trading Economics. Data. This represents a 14% jump last week. Crude oil has now rebounded nearly 30% from its early July low near $71.
The rise has a clear cause. The June 17 truce between Washington and Tehran led to the reopening of the strait, and the price of oil fell from more than $107 in May to $71.
US President Donald Trump That truce ended on July 8. The war bonus is right back.
The strait carries about a fifth of the world’s oil, and traffic is now weak. Kuwait said that Iranian strikes hit a power and water station twice in two days, Al Jazeera I mentioned.
The damage is hitting US wallets as well. BeInCrypto recently demonstrated how Hormuz oil shock It retracts the decline in inflation in June.
Why would the Fed raise interest rates instead of lowering them?
Bonds fell as oil jumped. The yield on 10-year Treasury bonds remains near 4.55%, near a two-month high.
Here is the problem. US prices fell 0.4% in June, the largest monthly decline since April 2020, because energy became 5.7% cheaper, Bureau of Labor Statistics Show data. As for the price of oil at $90, these calculations work in the opposite direction.
The Fed is already inclined to tighten monetary policy. New Chairman Kevin Warsh held interest rates steady in June, and nine of his 18 colleagues see interest rates higher this year. At a central bank forum in Portugal on July 1, Warsh kept his remarks brief.
“Prices are too high,” Kevin Warsh male.
Note the traders. The odds of a rise in the meeting, which will be held from July 28 to 29, have doubled to 36% from 18% in early July. As of this writing, the figure is 14%, according to CME FedWatch data, and remains high.
Silver actually fell due to the oil shock Raising the Fed’s raise bets. Economists also expect European Central Bank interest rate hike In September.
What does this mean for Bitcoin
None of this helps cryptocurrencies. High interest rates are hurting risk assets, and Bitcoin (BTC) is struggling to sustain its recovery Sellers fade on every bounceBeInCrypto analysis shows.
The war itself didn’t help either. BeInCrypto’s first-stage study, from February 28 to June 17, found that stocks outperformed BTC. The most powerful war hedge.
Now all eyes are on July 28 and 29. If the price of oil remains above $90, a Fed rate hike may move from risk to base case.
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