Brent crude rose more than 6% on July 23, breaking above $100 per barrel. Over the past month, it has gained 30.88%. Economist Peter Schiff (Peter Schiff) warned on X that since the start of July, oil prices are up 30%, back above $90 per barrel; if it reaches $100 by month-end, it would rise 43%, and July CPI could be extremely surprising.
Brent crude breaks above $100 per barrel
According to market data, Brent crude (the global crude benchmark) rose more than 6% on Thursday, breaking above $100 per barrel for the first time since May. The cumulative gain over the past month is 30.88%. Natural gas prices rose in tandem; the average UK natural gas price is about 150 pence per therm, compared with nearly 98 pence at the end of June.
The main geopolitical factors driving the rise in oil prices are as follows:
Escalation of U.S.-Iran military action: The United States increases the intensity of its military strikes on Iran, pushing oil prices higher
Houthi attacks: Houthi attacks on oil tankers in Yemen’s Red Sea ports intensify fears about global energy supply
Blockade of the Strait of Hormuz: Iran blocks the Strait of Hormuz and oil transport routes from Saudi Arabia
End of the ceasefire agreement: The temporary U.S.-Iran ceasefire agreement has ended; U.S. Secretary of State Marco Rubio said this week that Iran’s leadership is “not yet ready to reach an agreement”
Peter Schiff warns: July oil price gains could completely reverse the CPI drop
Based on Peter Schiff’s public post on X, his specific points are: June CPI fell to 3.5% (below expectations), mainly because oil prices dropped 30%; oil prices are up 30% so far in July. If it reaches $100 per barrel by month-end, the month-over-month increase would be 43%, potentially “fully reversing” the decline in June CPI. He said “July CPI could be extremely surprising.”
U.S. Bureau of Labor Statistics data shows June CPI at 3.5% year-over-year (market expectation: 3.8%) and a 0.4% month-over-month decline (market expectation: -0.1%).
CME FedWatch data: 62.1% odds of holding rates
According to the latest CME FedWatch tool data, the market’s rate-decision expectations for the Fed’s FOMC meeting on July 28–29 are as follows: a 62.1% probability of keeping the benchmark rate at 3.50%-3.75%, and a 37.9% probability of a 25 bps hike.
The latest U.S. employment data also adds pressure to the market amid the U.S.-Iran conflict. After the data release, traders raised the probability of a 25 bps hike from the prior level to 37.9%.
FAQ
What is Peter Schiff’s warning about July CPI?
According to Peter Schiff’s public post on X, he said the only reason June CPI fell sharply was a 30% drop in oil prices, while oil prices are up 30% in July (up 43% if it reaches $100), which could completely reverse June’s CPI decline; he warned that “July CPI could be extremely surprising.”
What are the main reasons Brent crude broke above $100?
According to market reports, the main reasons include: escalation of U.S. military action against Iran, Houthi attacks on oil tankers in Yemen’s Red Sea ports intensifying supply concerns, and Iran’s blockade of the Strait of Hormuz. The temporary U.S.-Iran ceasefire has ended, and U.S. Secretary of State Rubio said Iran is “not yet ready to reach an agreement.”
How do CME FedWatch expectations look for the FOMC July meeting?
According to the latest CME FedWatch data, at the FOMC meeting on July 28–29, the probability of holding the benchmark rate at 3.50%-3.75% is 62.1%, while the probability of a 25 bps hike is 37.9%.
