Rising oil prices and mounting risks to Middle East energy supplies are forcing central banks across developed economies to pay closer attention to inflation, with markets pricing a tighter path for interest rates, Macquarie strategists said in a note on Friday.
The prospect of prolonged disruptions to crude flows has added to concerns that higher energy costs could feed through to consumer prices, as economies operate with limited spare capacity.
Macquarie analysts said that Brent rose as high as $110 per barrel overnight before paring gains on Friday after reports that Yemen's Iran-backed Houthi rebels were advancing toward coastal areas near the Bab el-Mandeb strait.
"Of course, crude oil prices were
already high before today on the earlier reports of fuel-laden vessels being attacked by both sides in the US-Iran conflict," the analysts said, noting, that recent reports about Yemen's Houthi rebels moving toward coastal areas on the Red Sea "have unnerved crude oil traders."
The Bab el-Mandeb has become increasingly important for energy markets as disruptions to shipping through the Strait of Hormuz have altered the traditional flow of Middle Eastern oil.
Macquarie said the increase in oil prices matters not only because of the direct impact on fuel costs, but because crude is a critical input into economic activity. The consultancy said a sustained supply constraint can simultaneously weaken growth and raise inflation.
Analysts said that dynamic is becoming increasingly important for central banks, which had been focused on easing inflationary pressures but now face the prospect of an energy-driven resurgence in price growth.
The European Central Bank highlighted the inflationary consequences of the Middle East conflict, with its staff raising its Q4 2026 headline inflation forecast to 3.6% from 3.4%.
Macquarie said the shift was reflected in interest-rate markets, with the one-year forward euro overnight indexed swap rate rising sharply since oil prices began moving higher in early August.
For energy markets, the concern is that crude prices may remain elevated for long enough to generate second-round effects.
The Bank of England said that Brent prices about or above $100/bbl could push consumer inflation above 4%, while officials have cautioned that persistent energy costs could influence wage-setting and prolong underlying inflation.
Australia's central bank has also become more concerned about the pass-through from energy prices to consumer inflation, particularly because the economy is operating with relatively limited spare capacity.
Japan faces additional pressure from a weak yen, which increases the domestic cost of imported energy. Macquarie said Japan's import price index rose 24.8% in August from a year earlier, highlighting the potential for higher energy costs to feed through to wholesale prices.
The US Federal Reserve is a key exception to the increasingly explicit focus on oil-driven inflation.
Markets have focused heavily on US August consumer price data ahead of next week's Federal Open Market Committee meeting. However, Macquarie said the data could prove less important than the medium-term inflation outlook if crude prices remain elevated.
US producer prices for final demand rose 5.4% in August from a year earlier, up from 4.8% in July, providing another indication of renewed price pressure.
The consultancy said the Fed could therefore place greater weight on the inflationary consequences of the recent oil-price surge rather than treating the latest Consumer Price Index reading as the decisive indicator for policy.