Oil – Inflation? What’s Next?

Last week U.S. oil prices rose the most in a single week on record, surging more than 36%. As of last Friday, West Texas Intermediate (WTI) crude closed at $91.27 per barrel.

Concerns over rising oil prices pushed major stock indexes lower while bond yields moved higher. The rise in yields reflects market expectations that higher energy prices could translate into renewed inflation pressures.

Market Performance

For the week and year-to-date:

Index	Weekly	YTD
Dow Jones	(2.89%)	(1.04%)
S&P 500	(1.75%)	(1.27%)
Nasdaq	(0.59%)	(3.05%)
Russell 2000	(3.75%)	2.09%
Foreign Stocks	(6.53%)	2.57%
Emerging Markets	(8.06%)	5.16%
Bloomberg U.S. Bond	(0.86%)	0.87%
Bloomberg Municipal Bond	(0.71%)	1.47%

The U.S. 10-year Treasury yield ended the week at 4.138%.

Oil is now higher by 59.37% year-to-date.

Strait of Hormuz Disruption and the Global Oil Supply Risk

Reports indicate the Strait of Hormuz is effectively restricted, placing roughly 20% of the world’s oil supply at risk. Some oil-producing countries, including Kuwait, have already begun reducing production.

The United States announced the Navy may escort commercial vessels through the Strait. In addition, policymakers have discussed a $20 billion reinsurance program designed to protect commercial shipping and stabilize oil flows during the ongoing Iran conflict.

Whether these measures will be sufficient to stabilize oil prices remains to be seen.

Currently as of Monday morning 3/9 @ 5:00am, Oil is trading @ 103.70.

Could Rising Oil Prices Trigger Stagflation?

The key question is whether rising oil prices will significantly impact the global economy and financial markets.

If oil continues to climb, inflation concerns could intensify, pushing the cost of goods and services higher across the board.

Another concern is consumer sentiment. Consumers have continued spending freely, supporting corporate profits and stock prices. If higher inflation forces households to tighten their budgets, the economy could face a risk that has not been discussed in years:

Stagflation

Stagflation occurs when an economy experiences slow or no growth combined with rising prices. What makes stagflation especially difficult to address is that the two problems pull in opposite directions. The Federal Reserve’s primary tool for fighting inflation is raising interest rates, but higher rates tend to slow economic growth and put additional pressure on employment. That leaves policymakers in a difficult position with no easy answers.

What could reverse the current trajectory? Evidence that the conflict will conclude sooner than currently expected would likely ease energy pressures. While that is certainly possible, it is not something markets can count on at the moment.

Economic Data Last Week

The February jobs report disappointed, showing a loss of 92,000 jobs.

• Unemployment rate increased from 4.3% to 4.4%
• The current rate still suggests the economy remains near full employment
• The 3-month average job gain has slowed to roughly 3,000 per month

Key Economic Reports This Week

Investors will continue watching energy markets closely, along with several important economic reports:

• Tuesday: NFIB Small Business Optimism
• Wednesday: Consumer Price Index (CPI), Federal Budget Balance
• Thursday: Initial Jobless Claims, Housing Starts, Building Permits
• Friday: 4th Quarter 2025 GDP (second reading), Personal Consumption Expenditures (PCE) Index

Federal Reserve Outlook

The next Federal Reserve meeting is scheduled for March 17–18.

Current expectations are that the Fed will leave interest rates unchanged. However, the recent job loss number may increase the probability of rate cuts later this year.

Final Thoughts

Market pullbacks are normal and should be expected by investors and advisors alike. Each downturn tends to raise questions about whether it could evolve into a larger and more prolonged decline.

For now, markets remain focused on energy prices, inflation data, and geopolitical developments. Ideally, the conflict will resolve sooner rather than later, allowing oil prices to stabilize or decline.

That outcome would likely ease inflation concerns and provide support for both the economy and financial markets.

Thank you for reading!

Paul Levin, CFP®, ChFC®, RICP®, TPCP®
Managing Principal

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

All market data sourced from The Wall Street Journal, March 6, 2026.