Trump announced a new blockade on Iranian ports near the Strait of Hormuz on Monday.
Trump announced a new blockade on Iranian ports near the Strait of Hormuz on Monday. The US will also charge a 20% toll on all cargo passing through. This is a huge escalation. The fee is meant to cover safe transit costs. Yet the UN International Maritime Organization opposes such fees for international straits.
Iran’s foreign minister replied fast on X. He said Tehran controls the waterway and deserves its own pay. We now face a direct clash over a vital energy chokepoint.
Markets felt the shock right away. WTI crude jumped 9.4% to close at $78.14 per barrel. Brent rose 9.6% to $83.30. Both hit highs not seen since June 15.
This issue goes beyond energy now. It affects rate expectations too. CME FedWatch odds for a quarter-point hike on July 29 leaped to 46.5%. That was up from 34% just two days before as traders weighed inflation risks.
Fed Governor Christopher Waller backed this view. He called inflation the top policy concern. He also warned against waiting too long to tighten like we did in 2021-2022.
I think we are making monetary policy react to a supply shock instead of real demand. This creates a risky loop. Raising rates during an oil spike might hurt growth without fixing the actual supply problem. What's your take?
Not financial advice. For informational and educational purposes only.
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