Oil Surges Above $100 as Middle East Tensions Rattle Global Markets

François Villeroy de Galhau, head of the Bank of France, says inflation should return to the 2% target by 2027. But ongoing Middle East tensions involving the United States, Israel, and Iran have caused a major supply disruption through the Strait of Hormuz, sending oil above $100 a barrel.

Currency markets are reacting, with the South Korean won hitting its weakest level since February 2026 against the dollar. The U.S. and the International Energy Agency have released strategic reserves to stabilize markets.

In prediction markets, the probability of a 50+ basis point ECB rate cut in April 2026 remains at 100% YES. Meanwhile, the Fed's June 2026 rate cut probability is just 3.6% YES, while July 2026 stands at 88.5% YES, signaling near-term uncertainty.

Analysts say high oil prices and supply disruptions make aggressive rate cuts less likely, as central banks focus on containing persistent inflation. All eyes are now on statements from ECB President Christine Lagarde and Fed Chair Jerome Powell for policy direction.