Oil Prices Surge, Inflation Concerns Rise After Iran Conflict

Federal Reserve expected to hold rates steady amid geopolitical tensions

Mar. 13, 2026 at 12:05pm

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Oil prices rose sharply after Iran's new supreme leader threatened to close the Strait of Hormuz, with Brent crude climbing above $100 per barrel for the first time since 2022. The conflict has dampened hopes for interest rate cuts this year, as the Federal Reserve is now expected to hold rates steady to address rising inflation concerns.

Why it matters

The spike in oil prices and inflation risks stemming from the Iran conflict could have significant economic implications, potentially slowing growth and forcing the Federal Reserve to take a more hawkish stance on monetary policy. This could impact consumer spending, business investment, and the broader financial markets.

The details

Oil prices jumped 9.22% on Thursday, with Brent crude closing above $100 per barrel, after Iran's new supreme leader, Mojtaba Khamenei, threatened to keep the Strait of Hormuz closed to "pressure the enemy." The conflict has raised concerns about supply disruptions, driving up energy prices and inflation worries. As a result, traders are now anticipating only one interest rate cut from the Federal Reserve this year, down from previous expectations of two or three cuts.

  • On Thursday, Brent crude oil prices closed above $100 per barrel for the first time since 2022.
  • The Federal Reserve is set to issue its next rate decision on March 18, 2026.

The players

Mojtaba Khamenei

The new supreme leader of Iran, who threatened to keep the Strait of Hormuz closed to "pressure the enemy."

Federal Reserve

The central bank of the United States, which is expected to hold interest rates steady amid rising inflation concerns stemming from the Iran conflict.

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What they’re saying

“The Strait of Hormuz should stay closed to pressure the enemy.”

— Mojtaba Khamenei, Supreme Leader of Iran

What’s next

The Federal Reserve is set to issue its next rate decision on March 18, 2026, where it is expected to hold rates steady in response to the inflation risks posed by the Iran conflict.

The takeaway

The surge in oil prices and inflation concerns following the Iran conflict have dampened expectations for interest rate cuts this year, as the Federal Reserve is likely to take a more cautious approach to monetary policy in order to address the rising inflationary pressures.