Introduction: Oil falls after Iraq signs deal to resume exports via Turkey
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The conflict in the Middle East continues to grip the markets, as ship traffic through the strait of Hormuz continues to be slowed by the crisis.
But this morning, oil has dropped after Iraq reportedly struck a deal with Turkey to resume oil exports through their territory, having agreed with Kurdistan to pump oil through a pipeline in its region.
According to Reuters, crude exports from Iraq’s Kirkuk fields by pipeline to Turkey’s Ceyhan port have resumed, giving an alternative route rather than braving the strait.
But, the rerouting of some Iraqi oil through Turkey will only partially relieve supply concerns, Bloomberg reports, adding that Iraq’s oil production has fallen to about 1.4 million barrels a day — about a third of levels before the closure of Hormuz.
Brent crude is down 1.55% this morning at $101.80 a barrel, while US crude is almost 3% lower at $93.42 a barrel.
Ipek Ozkardeskaya, senior analyst at Swissquote, says:
double quotation markThis morning, oil is sharply down on news that Iraq signed a deal to resume oil exports via Turkey, bypassing the Strait of Hormuz, while Saudi Arabia is also rerouting exports toward the Red Sea. The region is reorganizing, preparing for the possibility of a prolonged conflict.
Restoring oil exports fully will take time, and we may soon see physical-market shortages — likely keeping oil prices under upward pressure. Yet, as flows adapt to alternative routes, the initial surge in oil prices seen at the start of the war could ease.
Stock markets are responding to this too – Japan’s Nikkei has gained 2.8% this morning, while South Korea’s KOSPI has jumped by 5.7%.
Investors are also hoping that central bankers will ‘look through’ the approaching spike in inflation, rather than reacting by raising interest rates. We’ll hear from America’s top central banker, Jerome Powell, tonight, when the Federal Reserve is widely expected to leave US interest rates on hold.
Jim Reid of Deutsche Bank reports:
double quotation markThere is also a bit more calm in markets at the moment and a small hint that there is a decoupling from the price of oil as the last 24 hours have seen more positive risk markets and lower [bond] yields.
The agenda
10am GMT: Eurozone inflation report for February
12.30pm GMT: US producer prices inflation (PPI) report for February
1.45pm GMT: Bank of Canada interest rate decision
6pm GMT: US Federal Reserve interest rate decision
6.30pm GMT: Federal Reserve press conference
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Updated at 06.21 EDT
Key events
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Trump waives US shipping law for oil and gas in bid to lower prices | US-Israel war on Iran | The Guardian
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Iran published a list of Gulf energy sites it says may be targeted after its South Pars gas field was attacked today:
Iran’s semi-official media has published a list of retaliatory energy targets:
Ras Laffan refinery – Qatar
Samref oil refinery – Saudi Arabia
Al Hosn gasfield – UAE
Jubail petchem plant – Saudi Arabia
Mesaieed petchem plant – Qatar
— Javier Blas (@JavierBlas) March 18, 2026
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US waives Jones Act for 60 days to push down shipping costs
The US government is suspending a protectionist ban on foreign-flagged vessels transporting cargo between US ports, in an attempt to cool energy prices.
The White House has issued a 60-day waiver on the Jones Act, which requires goods sent between US ports to be carried on ships built, owned and operated by the US.
The move “will allow vital resources like oil, natural gas, fertilizer, and coal to flow freely to U.S. ports for sixty days,” White House press secretary Karoline Leavitt said in a statement reported by CNBC.
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Oil and gas prices rise after attack on Iranian energy infrastructure
Jillian Ambrose
Oil climbed towards $110 a barrel today, and gas prices have also risen, after Iran claimed that a US-Israeli air strike had targeted its gas infrastructure, marking the first strike on Iran’s fossil fuel production since the war began, my colleague Jillian Ambrose reports.
Iran state media reported that gas facilities at the giant South Pars fields, which it operates alongside Qatar, were attacked on Wednesday, leading to the shut down of several petrochemical assets “in order to control and prevent the speed of fire”.
In response Iran’s Revolutionary Guards threatened several energy facilities across Saudi Arabia, the UAE, and Qatar in retaliation for the attack on its energy sites, fuelling market concerns over oil and gas supplies from the region.
The international oil benchmark climbed by as much as 5% to a high of $108.60 a barrel, while Europe’s gas benchmark jumped by over 7.5% to over €55.50 per megawatt hour.
Qatar condemned the attack on the field. Qatari government spokesman Majid al-Ansra said:
double quotation mark“Targeting energy infrastructure constitutes a threat to global energy security, as well as to the peoples of the region and its environment.”
The Israeli targeting of facilities linked to Iran’s South Pars field, an extension of Qatar’s North Field, is a dangerous & irresponsible step amid the current military escalation in the region.
Targeting energy infrastructure constitutes a threat to global energy security, as…
— د. ماجد محمد الأنصاري Dr. Majed Al Ansari (@majedalansari) March 18, 2026
The global oil price pushed past $116 a barrel early last week, for the first time since May 2022, as traders began to count the cost of the war on global supplies of oil and gas.
Fossil fuel tankers have struggled to leave the Gulf since the start of the month when the IRGC wrested control of the strait of Hormuz, through which a fifth of the world’s seaborne oil trade flowed before the war began.
In addition to the chokehold on deliveries, Gulf producers have been forced to shut their own oil and gas fields after rerouting as much oil as possible via pipelines to bypass the strait and filling storage facilities.
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Updated at 10.30 EDT
Markets are being shaken out of the complacent mode we have seen the last three sessions, reports Neil Wilson, Saxo UK Investor Strategist.
The hotter-than-expected US producer price inflation report (see earlier) is one factor. Wilson says the jump in the PPI is “very much a tariff story and worry is that this signals further structural inflation risks alongside the current bout of energy-based pressures.”
The attack on Iran’s South Pars gas field is also a sign of “potential escalation in the Middle East as Iran and Israel are definitely seen targeting upstream production facilities for oil and nat gas” he adds.
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Bank of Canada: Middle East war has heightened the risks to the global economy
Canada’s central bank has warned that domestic near-term economic growth will be weaker than anticipated in January, following the war in the Middle East.
The Bank of Canada has left interest rates on hold today, and warned that the conflict has increased volatility in global energy prices and financial markets, and “heightened the risks to the global economy”.
The BoC’s monetary policy committee says:
double quotation markSince the outbreak of the conflict in the Middle East, global oil and natural gas prices have risen sharply, and this will boost global inflation in the near-term. In addition to energy supply disruptions, transportation bottlenecks stemming from the effective closure of the Strait of Hormuz could impact the supply of other commodities, such as fertilizer.
Financial conditions have tightened from accommodative levels. Global bond yields have risen, equity market prices have declined, and credit spreads have widened. The Canada-US dollar exchange rate has remained relatively stable.
The BoC also warns that the recent sharp increase in global energy prices has led to increases in gasoline prices, and this will push up total inflation in the coming months.
It concludes:
double quotation markAgainst this overall backdrop, Governing Council decided to maintain the policy rate at 2.25%. With recent data pointing to weaker economic activity and uncertainty elevated, risks to growth look tilted to the downside. At the same time, inflation risks have gone up due to higher energy prices.
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Updated at 09.59 EDT
European stock markets are now mostly in the red after Iranian state media reported that US and Israeli strikes have hit Iran’s offshore South Pars natural gas field in the southern Bushehr province (see earlier post).
With Brent crude now up 4.8% at $108.42, equities are moving in the other direction.
Britain’s FTSE 100 index is now down 70 points, or 0.67%, at 10,333 points.
Germany’s DAX index is down 0.4%, as is the pan-European Stoxx 600 index.
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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.
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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.
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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:
double quotation mark“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.”
ShareA chart showing the Brent crude oil priceShare
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.
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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:
double quotation mark“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.”
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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.
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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:
double quotation markOil 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.
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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:
double quotation markThe 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:
double quotation markOur 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:
double quotation markAI – 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:
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Updated at 06.35 EDT
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.
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