New Delhi, July 31 -- Rising oil prices driven by recent geopolitical tensions could prompt the US Federal Reserve to resume interest rate hikes later this year if they fuel inflation, according to a report by ICICI Bank.

The report said the Federal Open Market Committee (FOMC) is likely to remain on pause in the near term while continuing to assess incoming economic data, but warned that renewed inflationary pressures through the oil price channel could alter the policy outlook.

"Recent geopolitical events pose a major risk to inflation through the oil price channel. If inflation starts inching up in response to higher oil prices, the Fed could start tightening policy later this year," the report said.

The Fed kept interest rates unch...