Global markets remained on edge Wednesday as the conflict between the United States and Iran intensified for a second week, driving crude oil prices toward six-week highs and renewing concerns over inflation and future Federal Reserve policy.
Brent crude rose to around $94.40 a barrel after briefly topping $95, while West Texas Intermediate advanced above $87. Both benchmarks touched their highest levels since June 11, supported by the eleventh consecutive night of US strikes on Iran and threats from Iran-backed Houthi forces to target Saudi oil shipments. Several tankers reversed course in the Red Sea, tightening near-term supply expectations and widening the Brent three-month spread.
The geopolitical escalation dampened hopes for a diplomatic resolution. President Trump warned of “significant consequences” after the deaths of four US troops, and Iran signaled no readiness to return to formal talks. The US carried out strikes near Tabriz, while Iranian media reported additional attacks in the west of the country.
Rising energy costs reignited inflation fears, boosting market-implied probabilities of a Fed rate hike. Fed funds futures showed a 31% chance of a move this month, up from 10% a week ago, and a 75% probability of at least a quarter-point increase in September. A Reuters poll of economists still expects rates to remain unchanged for the rest of 2026, but risks are skewed to the upside.
Safe-haven demand lifted gold to a two-week high of $4,165.87 an ounce, aided by a softer US dollar. Meanwhile, US equities ended mixed. The S&P 500 slipped 0.1% and the Nasdaq fell 0.6%, with software stocks under pressure, though the Philadelphia Semiconductor Index ended higher. Super Micro Computer surged 21% after projecting stronger margins and disclosing over $60 billion in new orders. Investors also looked ahead to earnings from Alphabet and Tesla, expected to shed light on the returns from massive AI investments.
In a separate development, AMD and Anthropic reportedly agreed to a multibillion-dollar AI infrastructure deal involving next-generation Instinct MI450 chips. AMD will invest up to $5 billion in Anthropic, which will deploy the chips starting in early 2027 and use its Claude models to improve AMD’s technology.
With oil prices, geopolitical risks, and the rate outlook in flux, broader risk assets face a cautious environment, potentially affecting sentiment in the cryptocurrency market as well.
