EIA raises oil forecast as Hormuz standoff fuels inflation fears

Deutsche Bank ↘ 0.10% strategists warned on Tuesday that the ongoing closure of the Strait of Hormuz has pushed Brent crude oil above $85 a barrel, reviving inflation fears on both sides of the Atlantic and renewing speculation about hawkish central bank rate paths.

Oil Rally Extends as Strait Remains Shut

Brent crude rose to nearly $89 a barrel on Tuesday, marking a fourth consecutive session of gains as the standoff between the United States and Iran over the strategic waterway showed no signs of resolution. The rally came after Iran's Secretary of the Supreme National Security Council, Maj. Gen. Mohsen Rezaei, declared that the strait "will not be reopened until the United States ends the war and blockade, releases Iran's frozen assets, and the war throughout the region, including in Lebanon and Gaza, ends".cnbc+2

Deutsche Bank's research note highlighted that Brent had gained nearly 5% in the prior session alone, closing at $87.72 per barrel, while the six-month Brent future also climbed to $80.24. The bank noted that 10-year Treasury yields rose 6.2 basis points, unwinding their post-payrolls decline, with September Federal Reserve rate hike pricing returning above 50% ahead of Wednesday's Consumer Price Index report.fxstreet

Inflation Fears Spread Across Markets

"Markets found a darker cloud in the inflation outlook yesterday, as oil prices rose again amid the absence of a deal to reopen the Strait of Hormuz, fuelling fresh speculation about rate hikes," Deutsche Bank strategists wrote. The one-year Euro inflation swap climbed 12.6 basis points to 2.39%, underscoring the breadth of concern about energy-driven price pressures.fxstreet

The U.S. Energy Information Administration on Monday raised its 2026 Brent crude forecast to $87 a barrel from $82, and lifted its gasoline price estimate to $3.78 a gallon, citing persistent supply constraints. Tanker tracking data showed only eight vessels crossed the strait on Monday, compared with roughly 120 in pre-conflict conditions.roic+1

Equities Tread Water Ahead of CPI

U.S. equity markets were subdued on Tuesday as investors weighed the inflation implications. The Wall Street Journal News Corp ↗ 0.52% reported major indexes slipping as oil hovered near its 2026 closing high. The S&P 500 edged modestly in quiet trading, with market attention turning to Wednesday's CPI release as the next catalyst.wsj+2

Qatar's foreign ministry said on Tuesday that talks between Iran and Oman on the future of the strait are at a "critical point," offering a potential diplomatic off-ramp that markets are closely watching.abcnews