The rebound in oil prices is resurfacing as a potential inflation risk, raising doubts about how quickly central banks can ease policy and adding pressure to bitcoin.

For crypto investors, the macro picture has steadily deteriorated. Gold and silver have already surged to record levels, drawing capital away from risk assets. Now oil is moving higher as well, strengthening forces that tend to work against bitcoin.

West Texas Intermediate crude, the benchmark for North American oil markets, has gained roughly 12% this month to about $64.30 a barrel, its highest level since September. Brent crude, the global benchmark, has climbed in tandem to around $68.22.

The rally complicates expectations for lower interest rates, a key pillar of the bullish case for bitcoin. After reaching a peak above $126,000 in early October, the cryptocurrency has since slid below $90,000 as financial conditions remained tight.

Inflation implications

Oil prices play a central role in shaping inflation. Higher crude costs lift gasoline and transportation prices, which in turn raise the cost of producing and delivering goods across the economy, from food and clothing to electronics. Those higher expenses are typically passed on to consumers.

Rising prices can also feed into wage demands, creating a cycle in which higher labor costs prompt businesses to raise prices further.

The Federal Reserve has previously noted that oil price pass-through to inflation is “economically and statistically significant,” occurring both directly and through second-round effects such as higher inflation expectations that can lift core prices.

Persistent inflation often leads central banks to keep borrowing costs elevated. That dynamic weighed heavily on bitcoin in 2022, when aggressive Federal Reserve tightening helped drive a roughly 64% annual decline.

The latest move in oil comes as the Fed continues to confront renewed inflation concerns. On Wednesday, policymakers left interest rates unchanged in a range of 4.5% to 4.75%, saying inflation remains “somewhat elevated,” in part due to tariffs imposed by President Donald Trump on imported goods.

ING said the Fed’s statement and press conference suggested officials are increasingly confident that the policy-easing cycle is nearing its end.

That implies limited urgency to cut rates — a stance that rising oil prices could reinforce.

What’s behind the oil rally

Geopolitical risks and tightening supply conditions are driving crude higher.

Markets are reacting to heightened tensions involving Iran, a major oil producer, alongside declining U.S. inventories. In a recent Truth Social post, Trump warned that a large U.S. naval force was moving toward Iran and urged Tehran to reach a nuclear deal or face a “far worse” U.S. response.

Iran responded by pledging a strong retaliation, underscoring the potential economic and humanitarian risks of a broader conflict.

Meanwhile, data from the U.S. Energy Information Administration showed crude inventories fell by 2.3 million barrels in the week ended Jan. 24. Falling inventories typically indicate demand is outpacing supply, forcing refiners to draw down stockpiles.

Together, geopolitical tensions and tighter supply are lifting oil prices — and adding another macroeconomic headwind for bitcoin.