Market Minute: March 17th, 2026 - Oil Surge, Fed Pause & Inflation Risk
While potentially unnatural coming from an Italian…Happy St. Patrick’s Day!
It continues to be a very interesting time, and the markets are trying to decipher a path for stocks, bonds, and commodities. Not unlike other facets of life, the capital markets are all about linkages—and this year, the stock market’s ability to grind ever higher is inextricably linked to Fed action. When the conflict with Iran began, the Fed’s ability to consider lowering rates was likely put on hold.
Energy Prices & Inflation Pressure
As I type this note at 9:20 AM on March 17th, West Texas Intermediate crude is trading at $94.69 per barrel. We ended last year at $57.42—an increase of about 65%.
This rise in energy costs will:
Permeate the cost of other economic inputs
Place a floor under inflation
Make it more difficult for the Fed to consider cutting rates at their next meeting
Geopolitical Landscape
I have not served in the military, nor am I a military strategy expert, but it appears that the Iranian situation is going to grind on a bit longer.
From what I’ve read this morning, other oil-producing Middle Eastern nations are focused on keeping markets well supplied. At the same time, they are defending themselves from Iranian drones and missiles. Saudi Arabia has indicated patience with the situation, but that patience is not unlimited.
While we believe the current conflict is unlikely to spiral into a broader regional issue, we also recognize that escalation is not a zero-probability outcome.
Additionally, other countries appear reticent to commit military support to reopen the Strait of Hormuz. As one government put it: What can their navy do that the U.S. Navy cannot accomplish? President Trump appears to have preferred a coalition-based approach to the opening of Hormuz, but that does not seem likely at this time.
Where Do We Stand?
So where are we?
Our current thinking:
Crude likely remains elevated until the conflict is resolved
Equities will trade in sympathy with the latest geopolitical developments
The Fed will remain sidelined until energy prices decline enough to ease inflation concerns
At the same time, we are keeping a keen eye on employment. The most concerning potential outcome in this environment would be a period of short-term stagflation—where economic growth stalls while oil-driven inflation persists.
More to come. As always, please reach out if you would like to discuss your portfolio or our current thinking.
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