Brent crude oil prices hit $100 a barrel on Thursday for the first time since May, after reports that Yemen’s Iran-backed Houthis struck two Saudi oil tankers in the Red Sea located near the Strait of Hormuz, per CNN. West Texas Intermediate futures, a benchmark for U.S. oil prices, also broke the $90 per barrel threshold, hitting $92.25 at the time of this writing.
At the same time, Jordan and Kuwait, both U.S. allies, reported fresh attacks from Iran on U.S. strategic interests in their countries; (U.S. strikes on Iran reportedly killed two people at an Iraq-Iran border crossing, Iranian state media said as reported by CNN.)
President Donald Trump clapped back, warning of a “massive attack” against Tehran if there are additional attacks, according to CNBC.
As the standoff in the Strait of Hormuz continues to escalate, there are renewed questions about how a protracted war will affect American consumers.
U.S. gas prices
The conflict poses many questions: How the Iran war will affect inflation, bond rates, and the possibility of a Federal Reserve rate hike. But what is clear, is how it is impacting Americans at the pump.
On average, the price of gas keeps climbing, and is now $4.09 a gallon, with diesel at $5.20 a gallon, although prices vary widely across the country, as this up-to-date map from AAA shows.
Bond market sell-off
Beyond the pump, those rising oil prices and the uncertainty over the Iran war have led to a massive bond sell-off.
The 10-year Treasury yield hit 4.7% on Thursday, its highest level since January of 2025. Why is this important? Because the note is used as a benchmark for mortgage and loan rates and often used to predict growing inflation.
“The 10-year yield reflects how investors feel about inflation, economic growth and where interest rates may be headed over the long term,” according to Chase Bank. “That’s why it’s often treated as a barometer for broader economic expectations, not just a return on government debt.”
Fed rate hike?
In addition to growing concerns over inflation, investors are also looking at how oil prices will impact a possible rate hike from the Federal Reserve which next meets in September.
CME’s FedWatch tool shows investors increasingly think the Fed will, indeed, raise rates, from around 53% last week. to 82% now.
