IEA supply cut pushes oil toward $100 as Wall Street futures slide

Thursday 12 March 2026 - 10:50

By: Dakir Madiha

IEA supply cut pushes oil toward $100 as Wall Street futures slide

US stock futures fell sharply Thursday as oil prices climbed toward 100 dollars per barrel, intensifying concerns that the Iran conflict could trigger a prolonged energy shock, reignite inflation, and delay expected interest rate cuts by the Federal Reserve.

Futures tied to the Dow Jones Industrial Average dropped about 400 points. S&P 500 futures fell roughly 0.7 percent and Nasdaq 100 futures declined by a similar margin, according to Reuters.

The market sell off accelerated after the International Energy Agency sharply lowered its forecast for global oil supply growth this year. The agency now expects supply to rise by only 1.1 million barrels per day, down from an earlier estimate of 2.4 million barrels, citing severe disruptions linked to the Middle East conflict.

Brent crude climbed back toward the 100 dollar mark Thursday after briefly surpassing that level earlier in the week. The surge persisted despite the approval by G7 countries of a record coordinated release of strategic petroleum reserves totaling 400 million barrels.

Reports that Iranian forces struck oil tankers in Iraqi waters and attacks targeting oil infrastructure in Bahrain further fueled the rally in crude prices.

The rise in energy prices overshadowed the latest US inflation report released Wednesday. The consumer price index showed annual inflation holding steady at 2.4 percent in February, broadly matching expectations. Core inflation, which excludes food and energy, rose 2.5 percent compared with a year earlier.

Economists noted that the data did not reflect the recent oil shock. Mark Zandi, chief economist at Moody’s, said inflation may already be closer to 2.7 percent after accounting for distortions related to last autumn’s US government shutdown.

Bond markets also reacted to the energy shock. The yield on the US 10 year Treasury rose to around 4.24 percent, its highest level in five weeks, as investors priced in a greater risk of sustained inflation.

Expectations for the Federal Reserve’s next interest rate cut have shifted from July to September, according to the New York Times. Some bond market participants now believe rate reductions may not occur this year.

Equity markets in Asia also moved lower. Japan’s Nikkei 225 declined 1.6 percent, South Korea’s Kospi fell 0.75 percent, and Hong Kong’s Hang Seng futures pointed to additional losses.

Erik Norland, chief economist at CME Group, warned that conditions resembling stagflation could be forming. He said large fiscal deficits, inflation above central bank targets, and rising oil prices together create pressure on monetary policy.

Analysts say the key question for markets is how long oil prices remain elevated. Ed Yardeni of Yardeni Research raised the probability of a stagflation scenario similar to the 1970s to 35 percent.

Claudio Irigoyen, an economist at Bank of America, said the bank’s baseline view is that the Iran conflict will not alter Federal Reserve policy. However, he warned that oil prices sustained above 100 dollars per barrel could force policymakers to reconsider, with some officials potentially contemplating rate increases.

The Federal Reserve’s next policy meeting is scheduled for March 17 and 18.