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U.S.–Iran oil shock is lowering June Fed rate cut odds The U.S.–Iran conflict has triggered oil-market volatility, and investors have pared June Fed rate cut odds as a result. Markets appear to be reassessing nearer-term easing timelines in light of the energy shock and associated uncertainty. The federal reserve remains data-dependent on inflation and labor indicators. According to TheStreet, Chair Jerome Powell has emphasized not rushing into cuts, noting that energy-driven geopolitical risks warrant caution around the timing of any policy move. Why oil volatility matters for inflation and Fed timing Oil price volatility can lift headline inflation through gasoline and transportation costs, even if core gauges exclude energy. Persistent energy strength can bleed into broader prices over time, complicating disinflation. Conflict risk can embed a supply-risk premium into crude if shipping lanes or logistics are disrupted. That premium, if sustained, can slow the pace at which inflation returns toward target and affect the Fed’s rate path. Analysts also track the Iran–Israel conflict as another channel sustaining the oil risk premium and policy uncertainty. As MarketWatch reported, Jon Faust, former adviser to Fed Chair Powell, called the conflict a “major wild card” for the Fed, with June cut expectations fading toward later in the year. BingX: a trusted exchange delivering real advantages for traders at every level. Market reaction today: oil up, risk assets under pressure Oil prices have surged more than 8% to multi-month highs, with reports of damaged tankers disrupting shipments in key routes, as reported by Reuters. The move reflects a sharp repricing of supply risks and a wider geopolitical premium. Risk assets showed signs of pressure as investors weighed higher energy costs against growth prospects. Rate-sensitive segments adjusted to the possibility of higher-for-longer policy if inflation risks remain elevated. Scenarios: inflation shock vs demand shock for…

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Filed under: News - @ March 2, 2026 6:25 am