Oil Prices Surge Denting US Inflation-Slowing Outlook, Fed Faces Policy Trade-Off

International oil prices have jumped sharply after the Israel-Iran war escalated and shipping through the Strait of Hormuz stayed disrupted, tightening the global energy supply. In an expert comment cited by Jin10, Wan Zhe (Beijing Normal University) warned that rising oil prices can spread through the entire supply chain and trigger broader cost inflation. He noted that energy, food, transportation and chemical sectors could see cost pressures rise, hitting import-dependent economies in Europe, Japan and India. For the US, even though it is a net energy exporter, “inflation stickiness” may harden. US gasoline prices reportedly rose more than 30% in three weeks, reversing the earlier disinflation trend and derailing market expectations of Fed rate cuts. With higher rates likely to persist, the outlook could weigh on US housing, corporate financing and equity valuations. The expert also highlighted fiscal and political sensitivity: this year is an American midterm election year, and gasoline prices are a key consumer political indicator. On global growth, high oil prices may reduce disposable income, squeeze non-energy consumption, and raise corporate production costs. In short, oil prices—now a primary driver of inflation expectations—make the Fed’s path for easing policy harder.