Portland Mortgage Market Update — July 24, 2026

Rates took a beating this week as the escalation of the war in Iran pushed oil prices over $100/barrel. We have all come to know and love the Persian Gulf and the Strait of Hormuz, but now we have another waterway of significance, the Red Sea which is on the other side of Saudi Arabia and connects to the Mediterranean Sea through the Suez Canal. Countries in the area have stepped up plans to route oil through this passage but this week the Houthis (an Iran-backed military group) attacked a couple tankers in the Red Sea, effectively shutting down another passageway putting further pressure on the global energy supply.

Why are oil prices impacting interest rates? Because oil prices impact the price of virtually everything else we buy. Goods that are purchased need to be transported, and if it costs more to transport them, they will be need to be sold at a higher premium. This is why the improved CPI report from last week was mostly ignored- the report was based on numbers from the ceasefire and we are living in a different world right now where the Iran War might be the biggest driver of inflation.

So what is the Fed to do? Well they meet again next week an while chances of a rate hike at this meeting are minimal, the market is betting there is over a 90% chance that we see at least one rate hike before the end of the year. That being said, I would imagine Fed Chair Warsh uses this meeting as an opportunity to hold the line and reiterate the importance if his task forces. That way he can wait for their results (an hopefully the resolution of the war in Iran) before making any policy changes that could potentially push the economy into a recession.