TS Pulse: Oil lubricating rate moves

The re-escalation of war between Iran and the US has pushed the oil price to a level central banks can no longer ignore.

• Brent crude came close to $110 for the first time since May as ships in the Strait of Hormuz were attacked and a pipeline in Saudi Arabia, which has proven a crucial alternative route for exporting oil, was closed due to drone attacks. Higher inflation for longer is continuing to push government yields higher: this week saw 10-year US Treasury yields move above 5% for the first time since 2023 and to their highest level since 2007.
• The ECB raised rates by 25bps and said the conflict in the Middle East continues to fuel inflationary pressures, with inflation expected to remain well above its 2% target for an extended period. Meanwhile, the ECB kept its 2026 inflation forecast at 3.0% but revised its projections higher for 2027 and 2028, to 2.5% and 2.1%, respectively. Growth forecasts were upgraded to 0.9% for 2026 and 1.4% for 2027, while the 2028 forecast remained unchanged at 1.5%. Christine Lagarde said risks to growth are tilted to the downside, while inflation risks are currently tilted to the upside. 
• US inflation remained at 3.4% in August, in line with forecasts, despite rising 0.4% month-on-month, the most in three months. Core CPI rose 0.3% on the month, above 0.2% in July and forecasts of 0.2%. The annual rate however, slowed to 2.4%, the lowest reading since March 2021, in line with expectations. 
• UK GDP growth measured 0.4% month-on-month in July 2026, up from 0.3% growth in June and defying forecasts of zero growth. This was the strongest expansion since February, with services output rising 0.4%, production 0.2%, and construction 0.1%. On an annual basis, GDP expanded 1.6%, the strongest growth since February 2025, accelerating from 1.1% in June and beating expectations of 1.2%.
• UK jobs data showed unemployment remaining at 4.9% in July, despite being expected to climb to 5%, while earnings excluding bonuses remained at 3.5% and including bonuses slowed to 3.9%, again both as expected. The right direction for the Bank of England, but as their decisions are not just down to wage inflation, the market is still expecting a hike in November.

Source: Bloomberg; pricing as per 15 September 2026

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