Oil spike revives inflation risk
Oil jumped after attacks on Gulf energy facilities, with Brent and WTI surging and markets pricing renewed energy risk. That spike has amplified inflation expectations and increased the odds policymakers will pause rate easing as central banks weigh growth versus price stability. (reuters.com) (finance.yahoo.com)
Iranian-linked strikes over March 18–19 damaged Qatar’s Ras Laffan Industrial City and the Pearl GTL complex, hit the Samref refinery in Yanbu and caused fires at the UAE’s Shah gas field and Fujairah oil zone, according to regional operators and local authorities. (energyconnects.com) Brent futures rallied from around $102 to trade between $108 and as high as $116 a barrel in Asian and European hours, while U.S. WTI traded near the high-$90s to about $100, reflecting intraday gains near 5–6%. (bloomberg.com) Market-based measures of near-term inflation expectations climbed: the five‑year breakeven rose roughly 20 basis points toward about 2.65%, and the two‑year breakeven moved up to roughly 3.18%. (boereport.com) The Federal Reserve left the target federal‑funds range at 3.50%–3.75% at its March 18 meeting and noted that “near‑term measures of inflation expectations have risen in recent weeks, likely reflecting the substantial rise in oil prices.” (federalreserve.gov) Major Wall Street houses including Goldman Sachs and Barclays pushed their first expected Fed cut back toward September 2026, citing renewed inflation risks from the Middle East oil shock, while market‑implied futures trimmed the probability of early cuts. (money.usnews.com) The Fed’s Summary of Economic Projections raised its median PCE inflation forecast for the year to 2.7%, a level that reinforces officials’ caution about easing until oil‑driven upside risks to inflation subside. (federalreserve.gov)
