Oil prices are starting the week with another push higher, with more disconcerting headlines from the Middle East offering little comfort to markets.Saudi Arabia's East-West pipeline, which has been an alternative to bypass the Strait of Hormuz and move roughly 4 million barrels per day towards the Red Sea, was temporarily shut following drone attacks.Meanwhile, the Strait of Hormuz itself remains an obvious problem. Ship vessel traffic fell to single digits per day over the weekend, compared with a 10-day average of 14 vessels. For some context, the strait typically handled around 125 large commercial vessels per day before the US-Iran war began.The developments above are leading oil prices higher with Brent crude up 2.5% to $107.30 while WTI crude is gaining 2.7% to $102.70. The pressure remains firmly on after the sharp rise in energy prices over the past few weeks.And it's all coming as we get into an all-important week with the Fed decision on the calendar.With higher oil prices, inflation will continue to be a hot topic for markets. That as the longer oil prices stay elevated, the harder it becomes for central banks to argue that the shock can simply be looked through.And that also feeds straight into the bond market.10-year Treasury yields are already sitting near 5% since the end of last week, with 30-year Treasury yields briefly crossing above 5.40% on Friday.The inflation picture is one story driving that argument. But at the same time, market players are now increasingly more convinced that the Fed has to raise interest rates this week and the latest developments above only serve to reinforce that outlook.The market pricing now shows that traders are pricing in ~87% odds of a rate hike for 16 September with another 25 bps rate hike more or less priced in for December next.The next move by the Fed might feel a bit more straightforward in this case. But if things persist for much longer, central banks will have a bigger problem to deal with down the road. This article was written by Justin Low at investinglive.com.