【Epoch Times news on July 20, 2026】 – The escalating conflict between the US and Iran and the restriction on energy transportation in the Hormuz Strait pushed the price of Brent crude oil over $90 a barrel on Monday, July 20. The sharp rise in oil prices has exacerbated concerns in the market about rising inflation and the possibility of the Federal Reserve (Fed) raising interest rates, causing volatility in Asian stock markets and putting pressure on gold prices.
Brent crude oil futures rose by 3.05% on Monday, reaching $90.79 per barrel, marking a new high since June 11. US West Texas Intermediate (WTI) crude oil also rose by 2.65% to $84.68 per barrel, hitting its highest level since June 12.
Brent crude oil saw a weekly gain of 15.9% last week, the largest weekly increase since April, while WTI rose by 15.5%, the biggest weekly gain since early March.
Currently, the US military has launched attacks on Iran for the ninth consecutive night, and Iran has retaliated against multiple targets in the Gulf region. The US has announced a naval blockade on Iranian ports, and Iran has claimed to have increased control over ship traffic in the Strait of Hormuz.
The traffic volume in this vital global energy transport route has significantly decreased. Data from the London Stock Exchange Group (LSEG) shows that only four ships passed through the Strait of Hormuz on Sunday, half the number from the previous day. The UK Maritime Trade Operations Office (UKMTO) reported on Monday morning that a ship caught fire northwest of Kumzar, Oman.
Barclays Bank analyst Amarpreet Singh stated in a report, “In the coming days and weeks, it will become clearer to the outside world what level of oil exports can be sustained in the region under the new round of dual blockades.”
Singh added, “Given the current situation, we believe that the market is still underestimating the impact on inventories. Unlike in the early stages of the war, inventories are currently at their tightest levels in the past five years.”
Shane Oliver, Chief Investment Strategist at AMP, warned, “The longer the Strait of Hormuz remains closed and the war escalates, the more likely oil prices will have to rise to around $150 a barrel to curb demand in response to the supply shock.”
“This is not the base case we assume, but it has become a major risk again,” he said.
Rising fuel costs have reignited concerns in the market about inflation. Despite US consumer price index (CPI) data released last week unexpectedly coming in below expectations, the likelihood of the Fed raising interest rates at least once before the end of the year is gaining traction.
Market expectations for a rate hike by the Fed as early as September have risen to 60%, pushing the yield on 30-year US treasuries back above the psychological threshold of 5.0%. Higher bond yields tend to attract funds away from stocks towards fixed-income assets and raise the valuation thresholds that company earnings must meet.
Several officials, including Cleveland Fed President Beth Hammack, have recently indicated the need for rate hikes to curb persistent inflation.
Bruce Kasman, Chief Economist at JPMorgan Chase, stated, “We predict that the Fed will gradually shift towards rate hikes in 2027, but the risk balance is moving towards earlier rate hikes than expected.”
With rate hike expectations driving up bond yields, gold, which does not generate interest, is under pressure, with spot gold prices falling by 0.5% to approximately $3,998 per ounce.
Asian stock markets experienced volatility on Monday. The MSCI Asia-Pacific index (excluding Japan) fell by 0.3%. Following a nearly 9% plunge last week, the South Korean stock market plunged by another 4.2% on Monday. Prior market fluctuations forced some retail investors to exit leveraged positions.
The Japanese stock market was closed on Monday due to a holiday.
As of around 11 am Taiwan time on Monday, the Taiwan Weighted Index reported 42,747.39 points, up by 76.12 points, a 0.18% increase. However, the index opened at 42,793.15 points, rose to 43,084.51 points at one point, then fell to a low of 41,967.75 points, fluctuating over 1,100 points during the trading session.
Investors are also reassessing the high valuations of tech stocks. The Philadelphia Semiconductor Index fell by 10% last week, down 20% from its historical high in June.
The market is closely watching the forthcoming earnings reports from Alphabet, Intel, and Tesla this week, which will further test investor confidence in the AI boom.
Despite the macroeconomic environment’s continued instability, Savita Subramanian, analyst at Bank of America, remains optimistic about earnings prospects. She expects corporate earnings to exceed market consensus by 5%, with earnings growth reaching 28%.
It is projected that the technology sector will contribute over half of the earnings growth, with semiconductor industry profits expected to increase by around 130% year-on-year.