Crude oil jumped over 8% as supply disruptions in the Middle East intensified, with the Strait of Hormuz nearly shut down and a major Saudi refinery offline. Traders now brace for upcoming US inflation data, which could influence Federal Reserve policy and trigger volatility across markets.
- Brent crude rose above $98 per barrel due to supply disruptions.
- Saudi refinery in Jubail offline, reducing capacity by 300,000 bpd.
- Strait of Hormuz traffic nearly halted, impacting global oil flows.
- U.S. CPI data expected to influence Fed policy expectations.
- ^VIX climbed to 21.8, reflecting rising market volatility.
- USO ETF up 7.2%, energy stocks like XOM and CVX gained over 5%
Global oil markets surged on Thursday as geopolitical tensions in the Middle East triggered a sharp supply shock. Brent crude climbed above $98 per barrel, while U.S. West Texas Intermediate (WTI) rose to $94.50, reflecting immediate market repricing. The disruption stemmed from a near-total halt in maritime traffic through the Strait of Hormuz, a critical chokepoint for global oil flows, compounded by an attack on a key Saudi refining facility in Jubail, which reduced processing capacity by approximately 300,000 barrels per day. This confluence of events has reignited concerns about inflationary pressures ahead of the release of the March U.S. Consumer Price Index (CPI) report. Market participants are now pricing in a 60% probability of a 25-basis-point rate hike at the upcoming Federal Reserve meeting, up from 40% a week ago. The jump in oil prices has also lifted the CBOE Volatility Index (^VIX) to 21.8, signaling heightened risk appetite and uncertainty across asset classes. Energy equities and commodities have responded sharply: U.S. Oil (USO) ETF rose 7.2% in early trading, while major energy producers such as ExxonMobil (XOM) and Chevron (CVX) saw their shares climb over 5%. The rally in crude has also sparked concerns about a second-round inflationary effect, particularly on transportation and manufacturing costs, which could complicate the Fed’s balancing act between controlling inflation and supporting growth. With oil supply risks remaining elevated, traders are closely monitoring developments in the region and the upcoming CPI data. A hotter-than-expected inflation print could reinforce hawkish expectations, potentially pushing bond yields higher and increasing borrowing costs across the economy.