Oil prices above $100 a barrel have increased market expectations of a Federal Reserve interest-rate hike next week and revived discussion of a possible recession. Brent crude and U.S. benchmark WTI crude both exceeded $100 for the first time since July after U.S.-Iran tensions escalated without a deal in sight. The global and U.S. economies had remained resilient for six months despite severe disruption to oil and LNG (liquefied natural gas) flows through the Strait of Hormuz, supported by strategic-reserve releases, weaker Chinese crude imports, restricted fuel exports and demand reduction caused by high prices. Those buffers have largely faded. U.S. strategic crude reserves are at their lowest level since the early 1980s, while China has eased fuel-export restrictions and increased crude purchases after imports fell to a decade low in June. Hormuz flows have recovered to an estimated half to two-thirds of pre-war levels, but fuel supplies remain severely constrained. U.S. gasoline prices reached a seasonal record, while diesel averaged $6 per gallon after breaking the previous record of $5.85 the prior week. Higher crude and fuel prices are lifting Treasury yields and longer-term borrowing costs and could prompt the Fed to act against an inflation shock. CME FedWatch showed traders on September 10 assigning a 72.4% chance to a 0.25-basis point hike at next week's meeting, up from 49.4% a week earlier. Goldman Sachs has cut its estimate of recession risk within 12 months to 15% from 30% in March, but says another energy shock could raise it. The bank projects about 1.5% GDP growth in the second half of the year without another major shock. Goldman Sachs and GasBuddy said persistently high fuel prices could weaken consumer spending, raise goods-transport costs and rekindle inflation across supply chains.