Oil prices are approaching $100 a barrel, with strategists warning that a Federal Reserve interest rate hike could lead to a repeat of the 2008 crisis.

As oil prices edge back toward $100 per barrel, James Thorne, chief market strategist at Wellington Altus, warned that if the Federal Reserve raises interest rates amid an energy supply shock, it could repeat the policy mistake made before the 2008 financial crisis—misjudging rising energy prices as overheating economic demand. Thorne noted that while rising energy prices fuel inflation, they also erode household purchasing power and weigh on economic growth. If the Fed tightens financial conditions further to demonstrate its commitment to fighting inflation, it could instead amplify the risk of an economic downturn. He sees parallels between the current policy environment and the period before the 2008 crisis, when the Fed focused too heavily on inflation risks from energy prices while underestimating the economic impact of high energy costs. WTI crude oil has surged more than 20% in the past month, while Brent crude has risen over 18%. Meanwhile, a New York Fed survey shows U.S. consumers’ views on their household finances have worsened further, with the perceived probability of a rise in unemployment over the next year climbing to 44.4%—the highest level since April 2020. The Federal Reserve is set to hold its policy meeting on September 15-16, having kept interest rates unchanged for five consecutive meetings. Markets are now closely watching the U.S. August PPI and CPI data, due this week, to see if the energy shock will prompt the Fed to reconsider raising interest rates.