Oil price surge reignites inflation worries as ECB holds rates
A spike in oil prices toward $100 a barrel drove European government borrowing costs to long-term highs on July 23, 2026, reigniting inflation concerns. The European Central Bank held its key interest rate at 2.25% but signaled a potential hike in September if energy prices remain elevated. The oil surge followed Houthi strikes on two Saudi tankers and continued US military strikes on Iran, threatening global supply chokepoints. Germany's 10-year bund yield rose above 3.2% for the first time since 2011. Stock markets were mixed, with European shares pressured by a 15% drop in STMicroelectronics after an earnings miss and Alphabet's announcement of $15 billion in additional AI spending. The Japanese yen slipped back to a 40-year low against the dollar, while Asian markets saw gains led by South Korea's KOSPI. Scorching summer weather in Europe also threatens harvests and food prices.
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