Oil Surges Above $90 as Iran Conflict Fuels Fed Rate Hike Fears and Pressures Bitcoin

Oil prices climbed sharply after the United States carried out its eighth consecutive night of strikes on Iran over the weekend, while Tehran declared the Strait of Hormuz closed to unauthorized vessels. The escalating conflict has intensified supply concerns, driving energy prices higher and raising fresh worries about inflation and global markets.

Brent crude traded around $91.40 early Monday, up 3.2%, according to Trading Economics. The benchmark has gained roughly 14% over the past week and nearly 30% since hitting an early July low near $71.

The latest rally follows the collapse of a June 17 truce between Washington and Tehran that had briefly reopened the Strait of Hormuz and pushed oil prices lower from more than $107 in May. After President Donald Trump ended the ceasefire on July 8, geopolitical risk returned, sending crude prices soaring.

The Strait of Hormuz handles about 20% of global oil shipments, making any disruption a major concern for energy markets. Reports from Al Jazeera also said Iranian strikes damaged a Kuwaiti power and water facility twice within two days, adding to fears of broader regional instability.

Higher oil prices are also threatening the U.S. inflation outlook. June consumer prices fell 0.4%, helped by a 5.7% decline in energy costs. However, crude trading above $90 could reverse that trend and complicate the Federal Reserve's fight against inflation.

Fed Chair Kevin Warsh has maintained a hawkish stance, emphasizing that inflation remains too high. Markets have responded by increasing expectations that the Fed could raise interest rates at its July 28-29 meeting, although current CME FedWatch data still shows a relatively modest probability.

Rising Treasury yields have reinforced expectations of tighter monetary policy, while economists are also forecasting another European Central Bank rate hike in September.

For cryptocurrencies, the outlook remains challenging. Higher interest rates typically reduce demand for risk assets, and Bitcoin continues to struggle to sustain its recent recovery. Analysts also note that during the earlier phase of the U.S.-Iran conflict, traditional equities outperformed Bitcoin as a geopolitical hedge.

Investors are now watching whether Brent crude remains above $90, a level that could strengthen the case for another Fed rate hike and keep pressure on Bitcoin and other risk assets.