Crude oil prices are climbing sharply as markets reassess the durability of the US-Iran ceasefire, reigniting fears that energy costs could drive inflation higher.
The repricing comes at a sensitive juncture, with US inflation having already accelerated to its highest level in more than three years in May, according to recent Personal Consumption Expenditures (PCE) data.
The surge in energy costs is compounding existing inflationary pressures, challenging the narrative that price stability is firmly within reach.
Investors are increasingly focused on the potential for a renewed risk premium in oil markets, which could force central banks to maintain a hawkish stance for longer than previously anticipated.
The volatility underscores the fragility of the current disinflation trajectory, particularly as geopolitical uncertainties persist in the Gulf region.
This development marks a shift from earlier optimism that oil prices had stabilized near pre-conflict levels.
The renewed upward pressure on Brent crude suggests that supply-side risks remain a dominant driver of market sentiment, overshadowing demand-side considerations.