Eurodollar University The World Isn't Prepared for What Just Happened to Oil
Mar 3, 2026
They dig into the sudden oil and gasoline spikes after the Iran conflict and why supply routes, not demand, are to blame. They highlight surprising moves in Treasury markets and what rising nominal yields imply about Fed policy. They discuss how energy shocks can be disinflationary over time and place the unrest in Iran within a larger story of deglobalization and rising political instability.
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Iran Conflict Triggered A Quick Oil And Gasoline Spike
- Renewed conflict with Iran is driving a sharp energy-market reaction while broader financial moves remain muted.
- Oil jumped to ~$73 WTI and wholesale gasoline rose ~17% in two days as buyers scramble to reroute supply away from the Persian Gulf.
Hope For A Quick Resolution But Hedge For Sustained Disruption
- Hedge for the mess: hope for a quick resolution but prepare for sustained disruption if oil routes are rerouted or facilities damaged.
- Short-lived past spikes (June example) fell back within days, so monitor conflict duration closely.
Bond Market Is Repricing The Fed Not Inflation
- U.S. Treasury yields rose not because markets suddenly expect sustained inflation but because traders are repricing the Fed's likely response.
- The 10-year moved from ~3.93% to ~4.06% and the 2-year back up toward 3.50% as markets hedge against a Fed that will react to near-term CPI bumps.