If oil prices hit $150 per barrel and stay elevated for 3 months, US headline CPI inflation would spike to ~6%, the highest since the beginning of 2023, according to Pantheon Macroeconomics.

Even at $125 for 3 months, inflation would jump to ~5%, nearly double the current level.

Before the Iran War, the base case had inflation gradually declining towards ~2% by mid-2026.

The longer oil prices stay elevated, the harder it becomes for the Fed to cut rates.