Post by Augustine Chiagozie (@pabloexchange)

🛢Oil could put inflation back at the center of the market

Inflation had started easing as oil prices fell after the June ceasefire. That trend is now at risk of reversing as tensions in the Middle East escalate again.

The Strait of Hormuz, which carries about 20% of global oil supply, has seen tanker traffic drop sharply. Reuters also reports that Iran has told the Houthis to prepare for a possible closure of the Bab el-Mandeb strait if the conflict widens. Together, the two routes handle roughly 27% of global oil shipments.
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The U.S. also has less room to respond than in previous crises. The Strategic Petroleum Reserve has fallen to 326 million barrels, its lowest level since 1983.
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At the same time, the Federal Reserve is already concerned about inflation, with several policymakers still projecting higher rates rather than cuts.
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If oil prices keep rising, inflation could quickly become the market's biggest risk again.

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