Oil prices surged above $115 per barrel in the United States during the early hours of Monday after Donald Trump’s latest deadline threats pushed US inflation higher and Western equity markets lower.
If crude prices remain near current levels for another seven weeks, US consumer price inflation could climb to roughly 3.7 percent, the highest inflation reading since September 2023.
The rally in energy markets is already translating into higher costs for consumers. Since the Iran war began on February 28, Americans have spent an estimated $240 million more per day on fuel, bringing total additional fuel spending to about $8.6 billion over the past 36 days.
The latest projections now place the base-case US inflation outlook at 3.0%, though economists on X posted that the forecast continues to rise as the war timeline extends.
US stock futures moved lower at the open after Donald Trump declared Tuesday as “Power Plant and Bridge Day” in Iran.
Early market movements showed:
Investors appear increasingly cautious as Trump’s Iran deadline now stands a little over 45 hours away.
Despite rising tensions, back-channel diplomacy remains underway. The Trump administration’s advisers have been in contact overnight with Iranian Foreign Minister Abbas Araghchi to keep talks alive.
The discussions are being facilitated through mediators from Pakistan, Egypt, and Turkey.
Iran has continued to deny any progress in talks taking place so far.
The renewed surge in oil prices threatens to reverse recent progress in controlling inflation across the war-torn region and North America itself.
Energy costs remain one of the fastest channels through which the Gulf War impacts household spending, interest rate expectations, and overall global economic stability.
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