Finance
Morning bid: Crude shock
Published by Global Banking & Finance Review®
Posted on March 13, 2026
3 min readLast updated: March 13, 2026
Quick Summary
Oil is trading near $100 amid the expanding Iran–Middle East conflict, fueling fears of a prolonged supply shock. Markets are repricing monetary policy: Fed rate cuts now seen later and fewer, ECB hikes now widely expected—driving bond and equity sell‑offs while the dollar strengthens.
Crude Shock: Oil Price Spike and Market Volatility Amid Middle East Crisis
Market Reactions to Middle East Conflict and Oil Price Surge
A look at the day ahead in European and global markets from Ankur Banerjee
Stagflation Risks and Investor Sentiment
As markets come to terms with the prospect of a long war in the Middle East that may keep oil prices near the $100 per barrel level, the selloff in bonds and stocks has intensified and traders are scrambling to price the stagflation risks.
With the leaders of Iran, Israel and the United States all voicing defiance as the war approaches the two-week mark on Friday, investors are also bracing for more volatility, putting on their risk-off hats and buying U.S. dollars.
Interest Rate Outlook Shift
The receding hopes of a quick resolution have completely reshaped the global interest rate outlook. Traders are no longer fully pricing even one rate cut from the Federal Reserve this year compared to pricing two rate cuts at the end of February.
European Central Bank and Federal Reserve Divergence
For the European Central Bank, money markets fully priced a rate hike by July on Thursday, and a 70% chance of a second increase by December. In contrast, traders in February had attached a roughly 40% chance to a rate cut before year-end.
Central Bank Meetings and Market Focus
Amid these shifting rate expectations, a slew of central bank meetings next week will be of prime focus for markets as policymakers get a chance to articulate their views on inflation, rates and growth.
Bond Yields and Safe Havens
Euro area benchmark Bund yields hit their highest level in almost 2-1/2 years on Thursday, while the rate-sensitive two-year U.S. Treasury yields hit a six-month high.
The only safe haven that has held up since the war began has been the U.S. dollar, gaining over 2% against six major rivals.
Energy Markets and Policy Responses
Asian investors started their day with a bit of good news as the U.S. issued a 30-day waiver for countries to buy sanctioned Russian oil and petroleum products currently stranded at sea. Oil prices eased and stocks pared some losses on the news.
And while Treasury Secretary Scott Bessent said the move was a step to stabilize global energy markets, the relatively muted reaction underscored the very real inflation worries and bleak investor sentiment across the globe.
Stock Market Outlook
U.S. and European stock futures point to a slightly higher open but whether that momentum is sustained remains to be seen.
Key Developments to Watch
Key developments that could influence markets on Friday:
- UK GDP
- France CPI
- Euro zone industrial and manufacturing data
(By Ankur Banerjee; Editing by Sonali Paul)
Key Takeaways
- •Brent crude remains near the key $100 per barrel threshold as the war in Iran disrupts shipping and production, particularly via the Strait of Hormuz, prompting spikes from about $70 to over $110 in early March. (apnews.com)
- •Markets have scaled back expectations for Federal Reserve rate cuts: traders now anticipate a first cut around mid‑June, with just modest easing thereafter, compared to prior expectations of multiple cuts. (kbvalbury.com)
- •In Europe, money‑market pricing now reflects elevated odds (e.g. ~75%) of an ECB rate hike in 2026 — a sharp reversal from earlier expectations of cutting or holding — contributing to rising Bund yields. (reddit.com)
References
Frequently Asked Questions about Morning Bid: Crude shock
1Why are oil prices nearing $100 per barrel?
Oil prices are rising due to the prolonged conflict in the Middle East, which may disrupt supply and increase market uncertainty.
2How are global markets reacting to the crude shock?
Bonds and stocks have seen significant selloffs as traders price in stagflation risks, with increased volatility and a shift towards safe-haven assets like the US dollar.
3What is the current outlook for central bank interest rates?
Expectations for rate cuts have faded, with traders now not fully pricing in any Federal Reserve cuts for this year and anticipating possible hikes by the European Central Bank.
4Which assets have performed well since the conflict began?
The US dollar has been the main safe haven, gaining over 2% against major currencies since the conflict started.
5What upcoming events could further impact markets?
Upcoming central bank meetings and European data releases such as UK GDP, France CPI, and Euro zone manufacturing data are expected to significantly influence markets.
