Oil Surge Fuels Inflation Fears, Pressuring Central Banks Amid Geopolitical Tensions
TTF Natural Gas and crude oil prices jumped significantly this week, with Federal Reserve, Bank of England, and Bank of Japan rate decisions on next week's calendar.
The story
Global oil prices surged this week, with Brent crude climbing above $100 a barrel, driven by renewed tensions between the United States and Iran. Fears of supply disruptions in critical shipping routes, including the Red Sea and Strait of Hormuz, contributed to a significant geopolitical risk premium in energy markets. This escalation heightened concerns over global energy security and inflation.
US Treasury yields rose as higher oil prices reignited inflation concerns, increasing market expectations for Federal Reserve rate hikes. The benchmark 10-year Treasury note yield climbed above 4.7% for the first time since January 2025. Markets are now pricing in a significant probability of a Fed rate increase by September, reflecting the impact of persistent energy-driven inflation.
Gold prices declined, briefly falling below $4,000 per ounce, as the prospect of higher Fed interest rates outweighed its traditional safe-haven appeal despite escalating Middle East conflicts. However, central banks continued to accumulate gold, with China adding 14.93 tonnes to its reserves in June, marking its largest monthly purchase since October 2023. This ongoing official-sector buying provides a long-term structural demand for gold.
Energy and metals
TTF Natural Gas saw a notable increase, extending its monthly gains, while Brent Crude and WTI Crude also experienced significant upward movement for the week and month. Gold posted a modest climb for the week, though its year-to-date performance remained lower. Henry Hub Natural Gas, in contrast, dipped slightly over the week and month. In currency markets, the Saudi Riyal strengthened against the US Dollar, while the Korean Won eased. The Japanese Yen also showed a slight depreciation against the US Dollar. US Treasury yields moved higher across the curve, with the 5-year note experiencing the largest weekly basis point increase, reflecting broader market adjustments.
| Instrument | Now | 24h | 7d | MTD | YTD |
|---|---|---|---|---|---|
| Brent Crude | 96.78 USD/bbl | -3.9% | +9.9% | +32.7% | +59.0% |
| WTI Crude | 89.31 USD/bbl | -3.1% | +8.3% | +28.5% | +55.5% |
| TTF Natural Gas | 63.58 EUR/MWh | +2.7% | +10.8% | +46.3% | +125.8% |
| Henry Hub Natural Gas | 2.89 USD/MMBtu | -1.0% | -0.8% | -11.8% | -21.6% |
| Gold | 4,070.80 USD/oz | +0.6% | +1.4% | +1.2% | -5.9% |
Currencies vs the dollar
| Pair | Now | 24h | 7d | YTD |
|---|---|---|---|---|
| USD / CNY | 6.772 | -0.0% | -0.0% | -3.2% |
| USD / JPY | 163.791 | -0.0% | +0.9% | +4.7% |
| EUR / USD | 1.137 | -0.0% | -0.6% | -3.2% |
| USD / ARS | 1,496.000 | +0.5% | +1.4% | +3.1% |
| AUD / USD | 0.698 | +0.2% | +0.1% | +4.3% |
| USD / BRL | 5.075 | -0.4% | -0.8% | -7.3% |
| USD / CAD | 1.409 | +0.1% | +0.5% | +2.9% |
| GBP / USD | 1.332 | +0.1% | -0.9% | -1.1% |
| USD / IDR | 17,935.000 | -0.2% | +0.0% | +7.3% |
| USD / INR | 96.560 | -0.3% | +0.3% | +7.6% |
| USD / KRW | 1,462.100 | -0.8% | -1.7% | +1.7% |
| USD / MXN | 17.492 | -0.1% | +0.5% | -2.7% |
| USD / RUB | 77.575 | -0.9% | -0.7% | -2.4% |
| USD / SAR | 3.754 | +3.4% | +3.9% | +0.2% |
| USD / TRY | 47.328 | +0.0% | +0.5% | +10.2% |
| USD / ZAR | 16.825 | +0.1% | +1.6% | +1.4% |
US Treasury curve
| Maturity | Yield | Week | YTD |
|---|---|---|---|
| US 3M T-Bill | 3.805% | +10bp | +26bp |
| US 5Y Note | 4.426% | +15bp | +70bp |
| US 10Y Note | 4.679% | +14bp | +52bp |
| US 30Y Bond | 5.162% | +10bp | +32bp |
Central banks this week
Federal Reserve. Expected to hold rates, but market expectations for a September hike increased due to oil-driven inflation concerns.
The Fed faces a difficult balancing act, with rising energy prices potentially delaying any policy easing and increasing the likelihood of further tightening.
European Central Bank. Kept interest rates unchanged but indicated openness to future tightening.
The ECB is navigating fragile growth against mounting inflation concerns, suggesting that higher oil prices could delay the return to target and limit scope for easing.
Bank of England. Widely expected to leave interest rates unchanged, potentially with some dissenting votes.
Despite a deceleration in inflation, a forecasted bounce-back and muted wage pressures suggest the BoE will remain cautious, keeping the door open for future rate adjustments.
Bank of Japan. Expected to maintain its policy rate at 1.00%, while assessing previous hikes.
Governor Ueda is likely to emphasize the path for future rate hikes, as the central bank continues to evaluate the effects of its June increase and underlying inflation trends.
Reserves — who holds what, who is moving
China continues to hold the largest foreign exchange reserves, followed by Japan and Switzerland. While specific gold flow data for all countries was not available this week, central banks globally have maintained a pattern of accumulating gold, signaling ongoing diversification away from the dollar system. China, for instance, added 14.93 tonnes of gold to its reserves in June, its largest monthly purchase since October 2023. This trend suggests a structural shift in reserve management, with official institutions seeking to bolster their gold holdings amidst global economic uncertainties.
FX reserves — top 15 (excluding gold)
| Country | Reserves USD | As of |
|---|---|---|
| China | $3,424.9B | 2025 |
| Japan | $1,252.6B | 2025 |
| Switzerland | $929.6B | 2025 |
| Euro area | $594.4B | 2025 |
| India | $576.5B | 2025 |
| Saudi Arabia | $459.8B | 2025 |
| Korea, Rep. | $421.9B | 2025 |
| Singapore | $404.9B | 2025 |
| Brazil | $334.3B | 2025 |
| United Arab Emirates | $281.9B | 2025 |
| Thailand | $249.3B | 2025 |
| United States | $243.3B | 2025 |
| Mexico | $239.3B | 2025 |
| Israel | $229.5B | 2025 |
| Poland | $194.5B | 2025 |
Fuel + pump prices
| Fuel | Benchmark / pump | Driver + passthrough |
|---|---|---|
| Petrol (London) | Average 157.4 pence per litre (E10) as of July 25, 2026 | Retail prices reflect global crude oil trends and local competition. |
| Diesel (London) | Average 175.1 pence per litre (B7) as of July 25, 2026 | Retail prices are influenced by global crude oil trends. |
| Petrol (Delhi) | ₹102.12 per litre as of July 26, 2026 | Prices have remained steady since May 25, 2026, due to state-owned oil marketing companies. |
| Diesel (Delhi) | ₹95.20 per litre as of July 26, 2026 | Prices have remained steady since May 25, 2026, due to state-owned oil marketing companies. |
| Petrol (New York City) | $4.2320 per gallon (Regular Unleaded) as of July 25, 2026 | Retail gasoline prices are reflecting the broader increase in crude oil prices. |
| Diesel (New York City) | $5.5690 per gallon as of July 25, 2026 | Retail diesel prices are influenced by the upward movement in crude oil. |
| LPG (Delhi - Domestic) | ₹942 per 14.2 kg cylinder as of July 23, 2026 | Domestic LPG prices are maintained by government subsidy despite surging global LPG costs. |
What we’ll be watching this week
- US Federal Reserve rate decision (Wednesday, July 29)
- Germany July Ifo business climate survey (Monday, July 27)
- US June durable goods orders (Monday, July 27)
- Bank of England rate decision (Thursday, July 30)
- Bank of Japan rate decision (Friday, July 31)
- US Personal Consumption Expenditure (PCE) inflation report for June (next week)
- China Purchasing Managers' Indexes (next week)
- Eurozone Q2 GDP and inflation data (next week)
- Australia Q2 CPI data (next week)
Markets, FX, reserves: fmd-data (). Central bank moves + fuel benchmarks + calendar: grounded via Google Search at publish time.