Oil has climbed back to around $90 a barrel after U.S.-Iran peace talks collapsed and hostilities resumed, undercutting a July pickup in American business activity. The renewed surge threatens to lift energy costs and may push the Federal Reserve to raise rates in July or, more likely, September.
U.S. business activity picked up in July and companies ramped up hiring, yet those gains could prove short-lived if the conflict with Iran intensifies and oil climbs even higher. Crude has risen to around $90 from less than $70 a few weeks ago, though it has not returned to April's high of $113 a barrel.
The economy had been primed to benefit from the seeming end of the U.S. conflict with Iran; instead, peace talks failed, hostilities resumed and the price of oil surged again.
One prediction market puts the odds of crude oil reaching a new all-time high by September 30 at 9%, and the December 31 market at 19%.
The bigger concern is inflation. Higher energy costs are bound to add upward pressure on prices and could push the Federal Reserve to raise interest rates in July or, more likely, September.
A pair of S&P Global surveys tracking U.S. businesses showed positive momentum this month.
The services index rose to an 8-month high of 53.6 from 51.2 the prior month, while a survey of manufacturers inched down to 53.8. Any number above 50 signals growth.
According to MarketWatch, S&P Global economist Chris Williamson said: "July's upturn may not be the start of an improving trend."
Sources: MarketWatch, Crypto Briefing
Trading involves risk.
Risk Disclaimer
