Rising oil prices, fueled by conflict in the Middle East, have led to a reduction in market expectations for interest rate cuts by major central banks, including the U.S. Federal Reserve, the Bank of England, and the European Central Bank. The probability of three Fed rate cuts by 2026 has dropped from nearly 50% to 20%. Similarly, expectations for the Bank of England to implement three rate cuts this year have diminished, with the likelihood of a March cut falling from over 80% to 60%. The European Central Bank's anticipated rate cut has also been reduced, with markets now pricing in only a 5-basis-point cut. Yields on two-year government bonds in the U.S., U.K., and Germany have increased, reflecting heightened sensitivity to monetary policy changes. This shift is driven by a significant rise in inflation indicators, as Brent crude oil experiences its largest price surge in four years. Laura Cooper, Global Investment Strategist at New World Investments, noted that sustained oil price increases could complicate the disinflation process and delay further rate cuts.