WTI crude oil prices have surged nearly 9% to $110 per barrel in July 2026, as US-Iran tensions have escalated with missile strikes and rising concerns about potential disruptions to shipping through the Strait of Hormuz. According to latest reports, Brent crude has climbed above $83 per barrel, marking a significant increase from the previous $79 per barrel level. The Not a Chance Hormuz Opens (Nacho) trade, which bets that the strategic waterway remains closed, has been severely impacted, with the perceived odds of Hormuz reopening by the end of the year dropping from 65% to 56%. The Strait of Hormuz, which carried about one-fifth of global oil and gas supplies before the conflict, has been de-facto closed for 136 days due to attacks on tankers that have reduced traffic through the waterway.
Money markets are now pricing in around a 50% chance of a Federal Reserve rate hike in July, as the combination of rising oil prices and geopolitical tensions creates significant inflation pressures. According to CoinDesk, prediction markets had assigned a 36% chance of a Federal Reserve interest-rate increase this month, but the escalating tensions have pushed that probability higher. The easing of rate-hike pressure that much of what let bitcoin recover from its late-June lows near $58,000 is now being reversed, with rate-hike odds climbing back two weeks before the Fed meets July 28 and 29. Higher oil prices feed the inflation pressure that kept the Fed hawkish through June, running directly against crypto performance.
Bitcoin traded near $62,600 on Tuesday, down 0.3% over 24 hours and roughly flat on the week, according to CoinDesk data, as President Trump reinstated the U.S. blockade of Iranian ships through the Strait of Hormuz and demanded a 20% fee on all other cargo moving through the waterway. This development has reversed the peace trade that helped bitcoin recover in early July, with the conflict reviving after a June peace deal had appeared to settle. The peace trade is now unwinding, with rate-hike odds climbing back as the macro backdrop underneath the market has turned more hawkish. Market behavior indicates a heightened expectation of inflation, which may influence the Federal Reserve's monetary policy decisions in the coming months.
U.S. crude rose 4.54% to $74.65 per barrel while Brent climbed 4.51% to $79.44 per barrel on Monday, following the latest escalation in US-Iran tensions. According to Investing.com, American and Iranian forces exchanged missile and drone attacks on Monday and fought over control of the Strait of Hormuz, raising questions about an interim agreement to end the hostilities after Iran announced over the weekend that it had closed the strait. The gains followed a rise in the previous week that marked the largest weekly increase in approximately two months. The escalation in attacks threatened a deal reached last month to reopen the strait and stop the fighting, with Treasury yields extending their gains alongside crude prices after President Trump announced the U.S. was reinstating a naval blockade on Iran.
Bitcoin has spent a month between roughly $59,000 and $66,000, with the majors showing mixed performance as the macro backdrop shifts. As reported by CoinDesk, Ether held near $1,783 and is up on the week, while Solana, XRP and Hyperliquid are all down 5% or more over seven days. Despite the latest decline, US-listed spot Bitcoin exchange-traded funds attracted $197.4 million in net inflows last week, marking their first positive weekly flow in nine weeks and suggesting that investor demand has not disappeared entirely. The sustained ETF interest comes as markets await key economic data, with June CPI data due today, with headline inflation expected to have slowed to 3.8% from 4.2% year-over-year.
