• Super Admin
• 07 Mar, 2026

President Trump calling for an 'unconditional surrender' by Iran didn't help oil markets Friday Oil prices just made their largest weekly percentage jump on record, raising worries about inflation. U.S. and global benchmark prices on Friday tallied their largest weekly gains on record. Another week like that would lift prices very close to their all-time highs - and invite talk of an economic doomsday. The price of oil can have far-reaching effects on the global economy - from gasoline, jet fuel, utility and manufacturing costs, to inflation, consumer spending and employment. Higher prices can increase inflation, negatively impact consumers' purchasing power and slow economic growth, said Katy Kaminski, chief research strategist and portfolio manager at investment adviser AlphaSimplex. Higher inflation can, in turn, complicate monetary policy, she noted, which can then directly influence things like economic growth and employment. That's what makes the biggest-ever weekly percentage gains for both U.S. benchmark WTI (CL.1) and global benchmark Brent crude (BRN00) prices such a big concern. For the week ended March 6, April WTI (CLJ26) posted a gain of nearly 36% and May Brent (BRNK26) rose 27%. And as prices rally fast and strong, they inch closer to the record-high levels of more than $145 a barrel last seen in 2008. The impact of rising prices on the U.S. economy will depend on the extent of transportation disruptions in the crucial Strait of Hormuz, according to Goldman Sachs Research economists Jessica Rindels and Pierfrancesco Mei. The economists estimate that each sustained $10-per -barrel rise in oil prices would reduce U.S. economic growth this year by about 0.1 percentage point as the higher oil prices weigh on households' disposable income, leading them to limit spending. 'Doomsday' levels That's obviously not an economic "doomsday" scenario just yet. "'Doomsday' is clearly quite an extreme concept," said Michael Brown, senior research strategist at Pepperstone. He said the oil market hasn't brought the economy to that stage, "even if we do see crude benchmarks continuing to gain ground as supply disruptions persist, and as a greater geopolitical risk premium continues to be priced." Brent at $100 a barrel is the psychological level that market participants have on the radar right now, Brown said. Beyond that, the next level to keep an eye on would be the Russia-Ukraine war's highs, which started the most recent episode of $100 oil prices. Tariq Zahir, managing member at Tyche Capital Advisors, had more specific doomsday prices for U.S. and global economies in mind. That would be anything higher than $140 for Brent and $138 for WTI, he told MarketWatch. With the Iran conflict, if production were to be cut significantly, that would be a global problem, Zahir noted. China and other Asian economies would take a serious hit, as well as several European countries. If those production shutdowns result from the inability to load and store the oil, that would also have a large impact, said Zahir. The biggest issue is that if tankers can't pass through the Strait of Hormuz, then storage for oil will run out. Read: Prices to charter large oil tankers soar as Strait of Hormuz traffic grinds to a halt Looking back: 2008 and 2022 On July 3, 2008, WTI marked an all-time closing high of $145.29 a barrel, while Brent crude reached its all-time record of $146.08 a barrel, based on the front-month contracts, according to Dow Jones Market Data. At the time, the spike in oil prices was attributed to tensions and production disruptions in the Middle East and Nigeria, and strong global demand, particularly from China. That harkens to the present day, and whether rising concerns about disruptions to the oil market could push an economy closer to recession, said AlphaSimplex's Kaminski. In 2007 and 2008, high energy prices impacted the housing and credit markets, while also reducing household consumption, she said. Yet there are key differences between the current Iran conflict and the 2007-08 period. High prices nearly two decades ago were fueled by a demand surge and tight supply. The current situation comes as the world boasts ample oil supply - but also the potential for temporary disruptions, Kaminski said. While the 2007-08 period was "recessionary," the current situation seems to be interpreted by the market as an "inflation shock and potential drag on growth for now," she added. Read: Why the U.S.'s 'newfound oil' in Venezuela won't offset an Iran oil shock The last time oil prices were trading around the $100 level was 2022 - another period that's unique from the existing Iran conflict. That was mainly because Russia cut off natural gas into the European market; the most severe effects were in Europe itself, said Pavel Molchanov, a Raymond James investment-strategy analyst, while Russian oil exports were never actually disrupted. The current crisis is mainly an issue for Asian economies, because they depend "disproportionately" on oil and liquified natural gas from the Persian Gulf, Molchanov noted - and oil-tanker traffic through the Strait of Hormuz has been virtually halted. Duration Just how long any disruptions to the flow or production of oil in the Middle East last matters too, when it comes to the effects on the energy sector and the global economy. "It's not just about the price level of oil, but how long prices stay elevated," said Fawad Razaqzada, market analyst at StoneX. A couple of weeks may not be too damaging. But if we are talking about more than just a few weeks - say, months - at these higher levels, then this should "hit the global economy quite badly and lead to another inflation spike," Razaqzada said. "Anything north of $100 should be particularly bad," he added. With President Donald Trump calling for an "unconditional surrender" by Iran, the odds of a quick resolution to the conflict have fallen further, Razaqzada noted. This was reflected in the renewed surge in oil prices Friday, and by the further drop in equity markets. -Myra P. Saefong This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. Source: https://www.morningstar.com/news/marketwatch/20260307157/spike-in-oil-prices-triggers-talk-of-an-economic-doomsday-scenario