An interest rate hike was (FINALLY) discussed by the fed on June 24/25th.  Remember when I mentioned Richard Fisher was the smartest guy in the room as seen originally on BccList.com here?

The minutes from that meeting were released publicly over the last few days…

http://afp.google.com/article/ALeqM5htN2868alrCkUVVQxMPv-vSBev0Q

Thus, oil prices dropped as a result of an interest rate hike simply being discussed within the JUNE fed meeting…

http://money.cnn.com/2008/07/17/markets/oil/index.htm

It’s not rocket science.  Raise the rates, less US dollars go into the market, and the cost of goods go down.  As seen here.

That said, per the incorrect reasonings discussed in the above CNN.com article, the recent drop in oil prices has little to do with potential diplomacy with Iran and/or a natural gas sell off and everything to do with the fed actually doing its job.

Shout-Out: Hey fed, no need to actually raise the rates though that would be even better in regards to curbing our growing inflation.  Simply keep talking PUBLICLY about the possibility of the interest rate raising.  Boners.

P.S. As seen here, oil (and gas) prices will still rise because of the “busy driving season” we’re entering but should eventually subside in late August/September assuming something “crazy” doesn’t happen. $3.50 a gallon of gas coming soon to a city near you.