Brent crude surges past $100 as Hormuz crisis deepens

Brent crude surged past the $100 mark on Wednesday, crossing the psychologically critical triple-digit threshold for the first time since the initial weeks of the Strait of Hormuz crisis in March, as renewed disruptions to shipping through the vital waterway rattled global energy markets. The rally pushed U.S. Treasury yields to their highest levels of the year and intensified debate over whether the Federal Reserve will be forced to raise interest rates at its July 29 meeting.

Oil and Yields Spike in Tandem

Brent crude traded above $101 per barrel late Wednesday, up more than 7% over 24 hours, according to shipping tracker Straits Live. Rigzone reported Brent trading at $98.25 earlier in the session, a $14 per barrel increase from its July 16 close. The 10-year U.S. Treasury yield rose to 4.71%, its highest since January 2025, according to Trading Economics, up from 4.63% just two days earlier.Stlouisfed+3

The Freddie Mac Primary Mortgage Market Survey, released Thursday, showed the 30-year fixed-rate mortgage averaging 6.58%, up from 6.55% the prior week. The MBA 30-year mortgage rate stood at 6.69% for the week ending July 17, as borrowing costs tracked yields higher.Freddie Mac+1

Rate Hike Fears Intensify

Futures markets have been repricing the odds of a Fed rate hike at the July 28-29 Federal Open Market Committee meeting. As of early July, CME Fed funds futures showed roughly a 25% probability of a hike, up from single digits earlier this year. A Reuters report from late June showed probability briefly reaching 30-40% before moderating after fresh economic data. With the Fed holding rates at 3.50%-3.75% all year amid CPI running at 4.2%, CNBC reported in May that traders see a 43% chance of tighter policy arriving before year-end.CNBC+2

Markets on Edge

The S&P 500 slipped 0.14% on Wednesday to 7,498.96, while the Nasdaq Composite fell 0.57%. Though the declines were modest, investors adopted a cautious stance ahead of major tech earnings and amid escalating U.S.-Iran hostilities that have kept the Strait of Hormuz effectively closed since April 18.Blogger+2

ECB President Christine Lagarde has warned that prolonged Middle East conflict could push eurozone inflation above target for an extended period, opening the door to potential rate hikes. Eurozone inflation reached 3.2% in May, driven by energy prices rising nearly 11% year-over-year.reuters.com+1

The oil market's return to triple digits underscores the fragility of the current geopolitical situation. Barclays ↘ 2.72% raised its 2026 Brent forecast to $100 per barrel as early as May, warning that the longer the Hormuz disruption lasts, "the bigger and more persistent the price shock will be".الشرق الأوسط