Oil prices spiked Wednesday after Iran's Islamic Revolutionary Guard Corps fired ballistic missiles at a US airbase and CENTCOM site in Jordan — all intercepted, no casualties — sending Brent crude up 6.6% to $91.94 a barrel and WTI up 6.4% to $84.31. The attack broke a pause that started Friday when President Trump halted strikes to allow room for talks. Trump vowed to 'hit them hard' but said negotiations are still ongoing. The timing is brutal: the Federal Reserve announces its rate decision hours after the oil spike, with rates sitting at 3.50%-3.75% since June 17.
Oil spike and rate expectations
Expensive oil tends to increase market bets on a rate hike. When talks with Iran collapsed in July, Brent topped $100 and the implied probability of a hike tripled from 10.7% to nearly 36% in two weeks. After Washington paused strikes, Brent fell more than 15%; by Tuesday, CME FedWatch showed hike odds at 31.5%. Wednesday's missile attack could reverse that slide. JPMorgan expects the Fed to hold steady, but economist Michael Feroli predicts at least two officials — Beth Hammack and Lorie Logan — will push for a hike. The bank's scenario analysis gives a hold with tough tone a 50% probability, hold with soft tone 28%, and any hike just 2% combined.
What the data says
The Fed's June 17 statement already cited energy supply shocks as a factor keeping inflation above the 2% goal. Since then, June CPI fell 0.4% month-over-month — the largest drop since April 2020 — and yearly inflation slowed to 3.5% from 4.2%. Core inflation (excluding food and fuel) eased to 2.6% year-over-year. But energy costs are still up 15.7% year-over-year, gasoline up 26.7%. Jobless claims fell to 187,000, the lowest since 1969, versus expectations of 210,000 — a tight labor market that gives the Fed cover to stay hawkish.
Bitcoin's stake in the dot plot
Bitcoin trades near $64,102, up 1.35% on the day but down 46% over the past year. Its record high of $126,080 came in October 2025. For Bitcoin, the dot plot — the FOMC's rate projections — matters more than the rate decision itself. More officials predicting hikes would be negative. A hold with a tough tone might not move the needle much, but a hawkish dot plot could add pressure. The Fed's Chair Kevin Warsh no longer provides forward guidance on rate moves, so the dots are the only signal.
What to watch
The Fed decision and dot plot drop at 2:00 PM ET. If the oil spike pushes even one more official to pencil in a hike, markets could react fast. For now, the White House is balancing a military response with diplomatic channels — Trump said talks are still on. That uncertainty keeps oil volatile and the Fed's path murky. Bitcoin holders will be watching the dots more than the rate itself.
