"The US-Israeli military campaign against Iran, which began on February 28, 2026, has disrupted roughly 20% of global oil supplies transiting the Strait of Hormuz. Brent crude surged from around $70 to over $110 per barrel within days of the conflict's start. Thursday's escalation, with tanker attacks in Iraqi waters and Iran threatening oil at $200 a barrel, pushed crude back toward the $100 threshold."
"Goldman Sachs pushed back its forecast for the Fed's next rate cut to September from June, as oil-driven inflation complicates the rate path. Money market futures now price in only one quarter-point cut by December, down from two cuts expected before the conflict."
"The problem is that investors are increasingly pricing in a more protracted conflict that causes extensive economic damage. With no concrete signs of de-escalation yet, that's keeping oil prices elevated, and raising the risk of a broader stagflationary shock."
The CBOE Volatility Index surged 13% on Thursday to 24.92, driven by Iranian tanker strikes that pushed oil briefly to $100 per barrel. The US-Israeli military campaign beginning February 28, 2026, has disrupted approximately 20% of global oil supplies through the Strait of Hormuz, with Brent crude rising from $70 to over $110 per barrel. The escalation threatens stagflation, prompting Goldman Sachs to delay its Fed rate cut forecast to September and money markets to price in only one quarter-point cut by December instead of two. The VIX has climbed nearly 40% over the past month. Small-cap stocks suffered disproportionately, with the Russell 2000 falling 2.15% Thursday and 7% monthly, as domestic-focused companies lack pricing power to absorb oil-driven inflation.
Read at 24/7 Wall St.
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