Marketplace All-in-One Overnight, a wartime economy
Mar 2, 2026
Tom Kloza, chief analyst at Gulf Oil who tracks gasoline prices. Robin Brooks, Brookings senior fellow and global economics expert. They discuss how the Iran conflict is already reshaping energy markets. They cover rising oil and gas costs, shipping reroutes and supply chain choke points. They also outline implications for bonds, yields and central bank dilemmas.
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Oil Shock From Strait Of Hormuz Raises Recession Risk
- The oil shock from conflict with Iran is large and immediate, with oil up about 8% on the first trading day versus 2% when Russia invaded Ukraine.
- About 20% of global oil transits the Strait of Hormuz, so disruption there creates meaningful negative spillovers for the U.S. economy, says Robin Brooks.
Stagflation Puts Fed In A Policy Dilemma
- A central banker faces stagflation risk: the economy may need rate cuts while inflation is sticky and possibly rising.
- Markets are paring back expectations for Fed cuts because higher energy prices push inflation up, complicating rate decisions, says Robin Brooks.
Dollar Safe Haven Today But Governance Raises Long-Term Risk
- The dollar can rally as a short-term safe haven even when U.S. governance raises long-term concerns.
- But prolonged geopolitical unpredictability undermines confidence in U.S. governance and could threaten the dollar's reserve status, says Robin Brooks.