Oil prices are creeping higher and raising concerns about the impact on inflation’s cooling trajectory, consumers’ wallets and the Federal Reserve’s interest rate policy.

U.S. crude oil prices started rising in early summer after slipping or holding relatively steady for most of the year. West Texas Intermediate crude, the U.S. measure, is up 15% for the year and above $90 a barrel. Brent crude, the international standard is up 5% for the year and has also breached the $90 mark.

Higher oil prices trickle down to everything from gasoline prices to transportation and production costs for consumer goods. The unwelcome pressure on inflation comes as prices have been generally cooling throughout 2023.

Investors, economists and consumers are all hoping for the cooling trend to continue so the Federal Reserve can consider a longer pause after more than a year of aggressive interest rate hikes.

Gasoline prices are among consumers' biggest concerns, as it remains a necessary purchase for most people. Average prices at the pump have held relatively steady at $3.83 per gallon according to AAA, only a slight increase from a year ago.

“Pump prices appear to be defying the odds at the moment, despite a boost in the cost of oil,” said Andrew Gross, AAA spokesperson, in a statement. “This uneasy balancing act may last until we get beyond hurricane season.”

Saudi Arabia and Russia recently agreed to extend their voluntary oil production cuts through the end of this year, trimming 1.3 million barrels of crude out of the global market and boosting energy prices.

The impact on the Fed and the broader economy is a key concern for investors. The Fed is getting closer to its goal of lowering inflation to 2%, and it held rates steady at its last meeting. Wall Street expects a similar move at the central bank's next meeting and is hoping the pause continues into next year.

The central bank has so far been able to slow economic growth through rate increases without pushing the broader economy into a recession. But recent economic indicators have shown that consumer spending remains strong, along with prices being paid for goods and services.

The same pieces of the resilient economy that have proved to be a bulwark to a recession could also prompt the Fed to continue raising rates, and actually push the economy closer to a recession. Stocks will likely remain under pressure because of that data, along with higher oil prices and rising bond yields.

“Our year-end outlook remains positive, but we think near-term volatility will continue to test investor resolve,” said Sam Stovall, chief investment strategist at CFRA.