By Ian Werther in News — 13 Mar 2026

Oil volatility rises as Strait of Hormuz risk meets fading Fed rate-cut bets

Tensions in the Middle East between Iran and regional powers have raised the risk of conflict and sent global oil markets into volatility. The resulting price swings have stoked fears of higher inflation around the world.

President Donald Trump has turned up the pressure on the U.S. Federal Reserve, urging an immediate rate cut and arguing that policy should move faster than the central bank’s next meeting. He publicly targeted Fed Chair Jerome Powell in recent posts, calling for a cut now and labeling Powell as “Too Late Powell.”

Description from NASA (source):
"NASA's Terra Satellites Sees Spill on May 24
Sunlight illuminated the lingering oil slick off the Mississippi Delta on May 24, 2010. The Moderate-Resolution Imaging Spectroradiometer (MODIS) on NASA’s Terra satellite captured this image the same day.
Oil smoothes the ocean surface, making the Sun’s reflection brighter near the centerline of the path of the satellite, and reducing the scattering of sunlight in other places. As a result, the oil slick is brighter than the surrounding water in some places (image center) and darker than the surrounding water in others (image lower right). The tip of the Mississippi Delta is surrounded by muddy water that appears light tan. Bright white ribbons of oil streak across this sediment-laden water.
Tendrils of oil extend to the north and east of the main body of the slick. A small, dark plume along the edge of the slick, not far from the original location of the Deepwater Horizon rig, indicates a possible controlled burn of oil on the ocean surface.
To the west of the bird’s-foot part of the delta, dark patches in the water may also be oil, but detecting a manmade oil slick in coastal areas can be even more complicated than detecting it in the open ocean.
When oil slicks are visible in satellite images, it is because they have changed how the water reflects light, either by making the Sun’s reflection brighter or by dampening the scattering of sunlight, which makes the oily area darker. In coastal areas, however, similar changes in reflectivity can occur from differences in salinity (fresh versus salt water) and from naturally produced oils from plants.

Michon Scott, NASA's Earth Observatory, NASA Goddard Space Flight Center" — Representative image for context; not directly related to the specific event in this article. License: Public domain. Source: Wikimedia Commons.

Trump’s push comes as traders weigh the impact of potential disruption to crude shipments through the Strait of Hormuz, a key chokepoint for global oil supplies. Gasoline prices in the United States rose to about $3.58 per gallon, a roughly 20% jump in short order, according to the latest market data cited in the coverage.

Economists warned that inflation could re-accelerate toward the 4% level if price pressures from higher energy costs persist. The combination of an oil shock and upward price pressures has revived concerns about consumer costs and the trajectory of monetary policy.

Despite the president’s demands, a near-term rate cut appears unlikely. Markets were pricing in a high probability of holding rates at this month’s meeting, with some analyses suggesting a 97%-plus chance of no cut at that decision.

Beige and brown Lao oil-paper umbrella placed on the edge of a wooden house, at Heuan Chan heritage house, Luang Prabang, Laos. — Representative image for context; not directly related to the specific event in this article. License: CC BY-SA 4.0. Source: Wikimedia Commons.

Reuters notes a disconnect between Trump’s wishes and financial-market behavior, pointing out that investors remain focused on inflation risks rather than easing policy. The dynamic underscores the tension between domestic political pressures and the Fed’s data-driven mandate.

The timing matters beyond Korea because oil-price shocks and geopolitical tensions directly affect U.S. inflation, consumer spending, and the trajectory of financial markets. A sustained energy-price surge can feed through to interest-rate expectations, borrowing costs, and supply chains that rely on global commodity flows, all of which have implications for the U.S. economy and policy choices ahead of elections.

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