New York [US], July 14 : Oil prices are on the rise again as the interim peace agreement between Iran and the US frays, leading to renewed strikes between the two sides and dimming hopes of a durable peace in the region.
The critical Strait of Hormuz is again in the spotlight with US President Donald Trump bringing back the blockade of the strait and threatening to impose a 20 per cent fee on the transit of cargo.
Global benchmark Brent crude oil prices climbed to USD 86, while the US West Texas Intermediate rose to USD 80, their highest levels in a month.
Higher crude oil prices threaten gasoline prices that may have likely cooled last month as global crude oil prices dropped to pre-conflict levels after the signing of a memorandum of understanding between Iran and the US.
With the attack on tankers in the strait by Iran and retaliation by the US, the renewed conflict has cast uncertainty over any durable peace in the region.
US inflation numbers due today may have eased a little due to the fall in gasoline prices in June, but that comfort may not extend as the latest round of strikes could escalate into a wider conflict. Iran has targeted US bases in Kuwait and Bahrain, while in a fresh development, the Houthis, supported by Iran, launched strikes on Saudi Arabia, breaking a four-year truce. The Houthis accused the Saudis of attacking an airport under their control.
US Federal Reserve Governor Christopher Waller, in a speech on Monday, said that the central bank shouldn't "fight the last war" on inflation. He said that he is aware of the situation and the Fed won't repeat past mistakes, referring to the post-Covid phase when the central bank came under criticism for responding late to rising inflation. The delay cost the economy dearly as the inflation became more entrenched.
Higher inflation is also a big worry for President Trump as he faces the mid-term elections in November. Trump had warned the US oil companies to bring down the pump prices of gasoline and had ordered the Justice Department to launch a probe.