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      Oil Prices Surge Amid U.S.-Iran Tensions and Fed's Hawkish Stance

      Oil prices experienced a significant increase following U.S. military strikes on Iranian rocket launchers located on Larak Island, which were reportedly being prepared to mine the Strait of Hormuz. Brent crude surpassed $90 per barrel, while West Texas Intermediate (WTI) rose above $86. In response, Iran claimed to have conducted retaliatory strikes on U.S. bases in Jordan, although reports indicate that between 6 and 8 million barrels per day continue to transit the Strait, suggesting limited physical disruption to supply despite the heightened tensions.

      In addition to geopolitical factors, the Federal Reserve's monetary policy stance is influencing market dynamics. Fed Chair Kevin Warsh's remarks at the G20 reinforced a hawkish tone, suggesting that the era of secular stagnation is over. This has led to an increase in September rate hike odds, rising to approximately 57 percent from around 40 percent a week prior. The 10-year Treasury yield also climbed to about 4.7 percent, reflecting investor expectations of tighter monetary policy.

      The U.S. dollar strengthened in response to the shift in rate hike expectations, with USD/JPY briefly trading above 160. The Australian dollar is facing pressure from both the stronger dollar and the supportive oil rally, highlighting its role as a commodity currency. Meanwhile, U.S. equities saw a slight decline on Monday, with major indices down between 0.1 and 0.7 percent, although they maintained monthly gains for August, marking the Dow's fifth consecutive winning month.

      © 2026 KLEA News. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

      Source: KLEA News

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