Oil Pushes Back Toward $100
Crude oil pushed back toward the $100 per barrel level late in the week after a steep sell-off from Monday’s four-year high. Tensions in the Middle East continued to disrupt energy supply routes, especially around the Strait of Hormuz. This has been the source of volatility along with attempts by the IEA and U.S. to increase supply with releases from their respective strategic petroleum reserves.
The rally in oil is responsible for increasing concerns over inflation across global markets. Roughly 20% of global oil normally moves through that region, so any disruption tends to ripple through energy prices quickly, keeping silver investors on the defensive.
Rate Cut Timeline Keeps Getting Pushed Out
For spot and futures silver traders, the impact of higher oil prices is clear. Higher prices for a prolonged period of time increase the risk that inflation will stay elevated longer than expected. Consequently, this complicates the Federal Reserve’s plans to cut interest rates in 2026.
Earlier in the year, silver prices jumped to a record high as speculative traders bet aggressively on as many as three rate cuts this year by the Fed, but sticky inflation in January and February forced traders to push the first cut out to June. And now, rising energy prices have pushed those expectations further out.
On Thursday, Goldman Sachs said it was now expecting the Fed to cut in September and December. Of course, that all depends on whether the war in the Middle East comes to an end, the Strait of Hormuz reopens and damaged oil infrastructure is repaired quickly.
Industrial Demand Is the Only Floor Under Silver
The bottom line, if crude oil stays near or above $100 and inflation expectations rise further, silver may drive sideways-to-lower as traders may push Fed rate cut expectations deeper into the year. The only thing preventing a complete collapse in silver prices is the strong industrial demand.
