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Oil prices rise after Iran reports energy attacks

So much for oil falling!

Crude prices are now pushing higher, following a report that Iranian energy assets on the Persian Gulf coast have been hit by US and Israeli airstrikes.

According to Bloomberg, several assets — including the South Pars gas field and an oil plant and an unspecified petrochemicals facility near the city of Asaluyeh — were attacked, Iranian state TV reported.

Brent crude is now up 4% at around $108.10 a barrel.

Annual US PPI inflation hits highest in a year

Ouch. US wholesale inflation has jumped unexpectedly, startling the markets.

The Producer Price Index for final demand – a measure of wholesale inflation in the US economy – jumped by 0.7% in February, new data from the US Bureau of Labor Statistics shows. That’s the highest reading since last July.

Economists had forecast a drop to 0.3%, from 0.5% in January, so this suggests inflationary pressures are hotter than expected.

On an annual basis, the PPI index rose by 3.4% for the 12 months to February, the largest rise in a year, dashing hopes it would be unchanged at 2.9%.

It’s a sign that it may be harder for US central bankers to cut interest rates soon, if inflation was building up even before the Iranian war pushed up fuel costs.

US mortgage demand tumbles after Iran war drove up interest rates

The Iranian conflict has hurt America’s housing market, new data shows.

US mortgage rates last week jumped to the highest level since the end of last year, data from the Mortgage Bankers Association shows, dampening demand for new loans.

Total mortgage applications fell by 10.9%, week-on-week, with applications to refinance a home loan down 19%.

The average interest rate for 30-year fixed-rate mortgages increased to 6.30% from 6.19%, reflecting recent rises in wholesale borrowing costs since the war began.

MBA economist Joel Kan says:

“Mortgage rates continued to move higher, driven by increasing Treasury yields as the conflict in the Middle East kept oil prices elevated, along with the risk of a broader inflationary shock. Mortgage rates increased across the board.”

Metals prices are dipping today, another sign that market anxiety over the impact of the Iranian war is easing.

Aluminium prices have dropped to a one-week low, with the benchmark three-month aluminium contract on the London Metal Exchange down 1.2% to $3,359.50 a metric ton this morning.

That follows reports that Emirates Global Aluminium will route its aluminium exports and raw materials through Oman’s port of Sohar in the next few days, giving an alternatice route to the strait of Hormuz.

There’s little drama in the currency markets today, where the pound is down just 0.02% against the US dollar at $1.335.

Traders are confident the Bank of England will leave interest rates on hold tomorrow.

Grant Slade, economist at Morningstar, says:

“We expect the Bank of England to hold Bank Rate steady at 3.75% at tomorrow’s MPC meeting. Headline inflation is set to rise meaningfully in mid-2026 as it responds to surging energy prices amid the Middle East conflict.

Still, the shock to energy prices should prove a transitory phenomenon and we expect inflation will likely recede back into the ‘neighbourhood’ of 2% by year-end.”

Wall Street is set to open higher, as market anxiety over the Middle East crisis ebbs a little.

The Dow Jones industrial average is on track to gain around 0.5%, or 231 points, at 47,579 points.

The S&P 500 share index is up around 0.53% in the futures market.

Oil is inching a little higher, with Brent crude now unchanged this session at $103.45 a barrel.

US crude is still down, -1.6% today at $94.70 a barrel.

Joshua Mahony, chief market analyst at Scope Markets, say:

Oil prices have largely been treading water, with Brent rotating around the $100 mark. The trajectory of crude remains the key determinant of market sentiment, with the relative stability we have seen this week helping to lift stocks.

The latest comments from the Iranian Foreign Minister Abbas Araghchi indicated that the country was unlikely to change course on their nuclear policy, highlighting the desire for Israel and the US to go further in ensuring the programme is set back sufficiently to justify this conflict. While Iran have declared that the Straits of Hormuz are only closed to enemies, that appears to include most of their neighbours given their hosting of US bases. Thus, while Iranian exports continue to flow, the tightness in global energy markets does look likely to provide major risks for markets as we go forward.

Zack Polanski: UK must “exit the bond market doom loop”

Green party leader Zack Polanski is outlining his economic vision in a speech this morning, pledging to “end rip off Britain” and create a country “we can all afford to live in.”

He’s proposing some progressive, interventionist policies to fix the economy, including:

• Rent controls.

• Water renationalisation “to put a stop to sewage scandals and high bills”

• A faster drive towards renewable energy

• A wealth tax: 1% tax on wealth over £10m and 2% over £1bn would Polanski says would raise around £15bn per year

Polanski also criticises the privatisation push of the Thatchr government, and its impact on wealth inequality, saying:

The wealth of those who own those precious assets – the ones sold out from under us under Thatcher, and then sold back to us for profit. Their wealth – it’s skyrocketed.

He also calls for the UK to “exit the bond market doom loop” – the situation where the government faces speculation of higher taxes or spending cuts to keep within the fiscal rules and placate bond investors.

Polanski says:

Our fiscal framework is hypersensitive to market movements. And this creates policy uncertainty that then fuels the very market jitters it is there to supposedly prevent. And you don’t have to just take my word for it. Even the IFS, the supposed custodians of fiscal responsibility, are saying the framework is “dysfunctional.”

It’s an interesting comparison with Rachel Reeves’s Mais lecture yesterday, where the chancellor presented closer EU ties, a close embrace of AI, and support for regional growth as the key to creating a better, stronger economy.

The Greens are more wary of AI, with Polanski saying:

AI - in many ways has potential to be a force for good - but is already causing people to lose their jobs, consuming huge amounts of energy and water. Planned datacentres will produce little employment, and blight communities - plus further jeopardise our climate targets.

Our Politics Liveblog has full coverage of the speech:

In Thailand, news anchors ditched their jackets on air as the government called on the public to reduce their use of air conditioning to save energy. In the Philippines, many government workers are now operating on a four-day week. In Vietnam, officials have urged employers to allow staff to work from home.

Across south-east Asia, governments are scrambling to find ways to conserve energy and shield the public from soaring costs as war in the Middle East causes what the International Energy Agency has described as the largest supply disruption in the history of the global oil market.

More here: Fuel rations and no air con: south-east Asian nations race to conserve energy | Oil | The Guardian