Brent crude oil breaks $100 per barrel for the first time since July; odds of a September rate hike rise to 60%: The 'dovish narrative' collapses on the eve of the Fed’s policy meeting.

U.S. equity index futures traded flat on Wednesday: Dow E-minis fell 84 points (0.16%), S&P 500 E-minis were unchanged, and Nasdaq-100 E-minis edged up 0.04%. Mike Wilson, Morgan Stanley’s Chief U.S. Equity Strategist, warned that "rising oil prices and interest rates remain the key near-term risks to equities," noting that the Strategic Petroleum Reserve (SPR) has been heavily drawn down to cushion oil-price shocks. Policy pressures are mounting as well—the U.S. Strategic Petroleum Reserve has fallen to 289.7 million barrels, the lowest level since 1982; meanwhile, the Treasury Department is concurrently advancing bond buybacks to curb rising long-term yields. These multiple shocks are converging just before the release of the September 11 CPI data and the Federal Reserve’s September 15 monetary policy meeting. Worsening Strait of Hormuz disruptions shatter the 'dovish narrative' Brent crude oil has surged above $100 per barrel for the first time since July 24. As a critical maritime chokepoint handling roughly one-fifth of global oil shipments, the Strait of Hormuz normally sees daily throughput of about 18 million barrels; following the outbreak of conflict, however, flows have plunged dramatically to just 4.9 million barrels per day. The U.S.-Iran war has now entered its seventh month—and market expectations of de-escalation and restored shipping, previously priced in, have collapsed amid renewed escalation at the end of August and beginning of September: shipping disruptions have not eased but instead worsened. As of the end of August 2026, the U.S. Strategic Petroleum Reserve has declined to 289.7 million barrels—the lowest since 1982. Since the onset of the current U.S.-Iran conflict, approximately 58 million barrels—roughly 14% of total reserves—have been released. If releases continue at the current pace—another 39 million barrels—the SPR would fall further to around 243 million barrels, breaching the 250-million-barrel safety threshold. Compounding this is the political pressure ahead of the midterm elections, where gasoline prices remain tightly linked to voter sentiment—leaving policymakers with virtually no remaining buffer to dampen oil prices. On the fiscal front, efforts aim to ‘extinguish’ upward pressure on long-end yields: the U.S. Treasury previously announced plans to purchase more long-dated Treasuries to contain yield increases. Its buyback announcement released on Wednesday drew significant attention; JPMorgan analysts noted that some market participants are using it to confirm the scale of the Treasury’s intended purchases.

Tonight’s CPI report: Oil prices have already written the ‘spoiler’ on their face.

Tonight’s CPI—Oil Prices Have Already Written the ‘Spoiler’ on Their Face Friends, at 8:30 p.m. tonight (October 14), the U.S. September CPI report will be released—the final inflation reading before the November midterm elections. Markets are watching it intently. Today, let’s take a different angle—not diving into abstract theory, but focusing squarely on why this data matters so much. First, the ‘spoiler’: the numbers aren’t out yet—but markets already smell the heat. Economists surveyed by Dow Jones project: • Overall CPI month-on-month: +0.6% • Overall CPI year-on-year: +3.6% • Core CPI month-on-month: +0.2% • Core CPI year-on-year: +2.5% What does a 3.6% year-on-year figure mean? It signals that price growth isn’t slowing—in fact, it’s accelerating, pushing further away from the Fed’s 2% target. Although core CPI’s month-on-month increase dipped slightly from the prior month, its year-on-year reading continues rising—underscoring persistent inflationary stickiness. Even before the official release, markets have already sensed the ‘heat.’ So why is it so hot? Oil prices have already given us the answer. This round of inflation acceleration is being driven primarily by energy costs. Joe Brusuelas, Chief Economist at RSM, issued a direct warning: surging prices across the petroleum supply chain could push September’s headline CPI even higher than currently expected. Since the U.S.-Iran war erupted earlier this year, energy costs have become one of the most disruptive factors in U.S. inflation metrics. Last week, Trump announced relaxed export restrictions on Russian diesel in an effort to boost global oil trade—but analysts broadly agree this move is unlikely to meaningfully shift the elevated oil-price baseline. The data speaks for itself: • Brent crude rose 7.92% in September; • Its Q3 gain approached 33.52%. Brusuelas notes that current inflation models likely underestimate the true upside risk. Historically, during periods of such sharp volatility, actual data often exceeds market expectations. Even more troubling: high oil prices may ‘infect’ other sectors. Robert Sockin, Chief U.S. Economist at PGIM, adds a further caution: persistently high—and resilient—oil prices could transmit cost pressures broadly, lifting the underlying prices of non-energy goods and services across the board.

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US consumer prices are projected to rise in September due to surging gasoline and food costs, pressuring the Federal Reserve and elections. Energy shocks in oil and diesel remain central to inflation trends despite moderate core CPI expectations.

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High gasoline prices expected to boost US consumer inflation in September

High gasoline prices expected to boost US consumer inflation in September

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