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The relentless surge in oil prices, with topping $95 a barrel for the first time since November, is reshaping bets across global markets and setting the stage for a hawkish tone from major central banks. This comes as traders anticipate policy decisions in response to persistent inflation pressures.

Oil giants TotalEnergies (EPA:) SE, BP (NYSE:), and Shell (LON:) were the biggest contributors to gains in Europe’s benchmark on Tuesday. Meanwhile, US equity futures remained little changed and Asian stocks posted small losses. The rally in oil has gained momentum since mid-June, following Saudi Arabia and Russia’s concerted efforts to constrain supplies and drive a rebound in prices.

“The main story as we start the big central bank week has been the relentless rise in oil prices,” said Deutsche Bank AG (NYSE:) macro strategist Jim Reid. He added that investors have begun pricing in higher interest rates for a more extended period into 2024 amid fresh signs of inflationary pressures.

In response to the oil rally, US Treasury yields climbed, while the dollar edged higher against most of its major peers. Traders this week will focus on the so-called dot plot summary of economic forecasts by the Federal Reserve, which is expected to keep interest rates on hold.

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Investors are keen to see whether policymakers will retain their projections for one more 25 basis-point hike by year-end and how much easing they are penciling in for 2024. In June, they projected one percentage point of cuts. However, Joey Chew, head of Asia foreign-exchange research at HSBC Holdings (NYSE:), suggested that this might be too much given current growth and inflation trends in the US.

Meanwhile, BlackRock (NYSE:) Investment Institute downgraded its rating for emerging-market equities to neutral from overweight. Strategists cited China’s struggling property sector as a drag on growth and noted that policy stimulus isn’t as large as in the past.

The surge in oil prices is also impacting other sectors. Airline stocks and currencies of oil-importing nations are starting to reflect the reality of Brent at $95 a barrel. Michel Menigoz, head of equity and balanced fund management at Sanso Investment Solutions in Paris, warned that high oil prices could derail disinflation trends and prevent central banks from cutting rates as early as markets hope.

In the cryptocurrency market, rose 0.3% to $26,853.33 on Tuesday, while Ether remained little changed at $1,637.84.

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