Oil Jumps 3.9% After U.S. Strikes Iranian Launchers Near Hormuz
The U.S. military struck Iranian rocket launchers on Sunday. Central Command spokesman Capt. Tim Hawkins said the launchers were preparing to send mines into the Strait of Hormuz, making this the first direct American action against Iran in weeks.
The reaction showed up in crude first: WTI rose 3.9% to $86.63, and November Brent traded above $90. The mechanism is route risk rather than lost supply — traders tracking cargoes put current flows through the strait at 6 to 8 million barrels a day, and Iran's Mehr news agency says vessel traffic is running "on a limited basis," with ships paying tolls to pass. In premarket trade S&P 500 futures were down 0.24%, Dow futures down 0.24% and Nasdaq 100 futures down 0.20%; the VIX rose 5.9% to 15.28 and gold slipped 0.5% to $4,504.60.
The second story is the Fed, and the number has moved since Friday's brief. Chair Kevin Warsh spoke at Jackson Hole on Friday, and the odds of a 25 basis-point hike at the September meeting went from 35% before the speech to 57% at Friday's close and 62% this morning. Warsh was direct: "Inflation is running above our 2% target. So the Fed's predominant focus right now should be on prices." July data put CPI at 3.3% year over year and core PCE at 3.34%; the policy rate has been at 3.50%-3.75% for five meetings. The rose 4 basis points on Friday to 4.72%.
