Crude oil tested the psychologically important $100 per barrel level again this week, briefly topping that threshold after prices jumped nearly 5% on Wednesday. The move came as renewed attacks on vessels in the Gulf eclipsed the market impact of the International Energy Agency’s coordinated plan for an unprecedented reserve release.
Market measures of oil volatility recently reached readings not seen since 2020, underscoring the heightened uncertainty in supply expectations. Iran publicly warned that the conflict could push oil as high as $200 per barrel, and observers note the Islamic Republic appears in no hurry to restore secure Gulf shipping while hostilities continue.
Stock indices around the world have responded to the jump in oil with fresh weakness. Major U.S. indexes finished flat to lower on Wednesday, and Asian markets relinquished some of the gains they had posted earlier in the week on Thursday. European and U.S. futures were trading lower ahead of the opening bell.
The scale of the IEA’s emergency release - a planned 400 million barrels - is significant. That volume is more than twice the size of the coordinated release seen after the Ukraine invasion in 2022 and would, by calculations used by market participants, cover roughly 2-4 weeks of global crude demand. The market’s muted reaction to that record release is notable and suggests traders are placing weight on scenarios in which Gulf shipping remains impaired beyond the period the release would alleviate.
With that potential timeline in mind, financial markets are already pivoting to what this shock could mean for inflation and central bank policy. Interest rate markets have shifted markedly: a second U.S. interest rate cut has all but vanished from the Fed futures curve, and markets now price in barely one cut in 2026. February’s consumer price index matched expectations, but that data predates the recent spike in oil prices.
Next week brings a dense schedule of central bank decisions and policy-relevant events. The Reserve Bank of Australia is widely expected to raise rates again. Markets are pricing in a European Central Bank rate increase by July, and mortgage rates in Britain have started to climb once more. In this environment - driven by a renewed supply risk and higher energy costs - no major central bank appears likely to cut rates in the near term.
U.S. Treasury yields moved up to their highest levels in almost six months heading into Thursday, a shift that has been compounded by softer-than-expected debt auctions this week. The dollar continued to firm as investors pared back expectations of early rate reductions, and the stronger currency has put downward pressure on gold.
Chart of the day
The International Energy Agency has coordinated emergency stock releases only four times since its creation by OECD members in the mid-1970s in response to the 1973 OPEC oil embargo. The rarity of such coordinated action highlights the severity of the current disruption, according to commentary from energy analysts.
Events to watch
- U.S. January trade balance (8:30 AM EDT)
- U.S. January housing starts (8:30 AM EDT)
- Weekly U.S. jobless claims (8:30 AM EDT)
- U.S. 30-year Treasury note auction
- Remarks by Fed Governor Michelle Bowman
- International Energy Agency - March 2026 Oil Market Report
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