(The opinions expressed here are those of the authors.)

By Anna Szymanski

March 13 -

Everything Mike Dolan and the ROI team are excited to read,

watch and listen to over the weekend.

From the Editor

Hello Morning Bid readers!

Wall Street just recorded its worst day since the Iran war

began, as markets contemplated a shuttered Strait of Hormuz, an

escalating tanker war and triple-digit oil.

Given that backdrop, however - and indications that the conflict

may be far from over despite President Donald Trump's statements

to the contrary - the roughly 1.5% drops posted by the S&P 500,

Dow and Nasdaq on Thursday seem like barely a flesh wound.

Indeed, U.S. stocks, unlike their Asian and European

counterparts, have been remarkably calm during the past two

weeks as energy markets have been roiled.

Investors may be betting that Trump will eventually pull back to

avoid more market pain, the so-called 'TACO' trade ("Trump

always chickens out"). But the problem is that even if the

president does wrap up U.S. involvement in Iran quickly, it may

not matter. Given the damage that has already occurred in the

Middle East, this may be one TACO too many.

The week in oil has been truly historic. It kicked off on Monday

with a record-breaking $35 intraday move in Brent crude, as

prices neared $120 per barrel only to fall below $90 at one

point. Since then, prices have remained volatile, spiking 9% on

Thursday to back above $100/bbl amid Tehran's bombastic threats

that crude could reach $200.

This occurred even after the International Energy Agency said on

Wednesday that its 32 member countries were moving forward with

a 400-million-barrel reserve release - the biggest collective

drawdown ever. That market response is understandable, though,

as this emergency move appears to be little more than a very

large Band-Aid.

One of the more disturbing elements of this crisis is that no

one seems to have any clue how to price it, with the physical

market often exhibiting far more pain than paper trading has

reflected. It's telling that an errant social media post from

U.S. Energy Secretary Chris Wright was enough to send prices

lower on Tuesday.

The region most at risk remains Asia, which imports the vast

majority of its energy from the Middle East. The biggest

squeezes are in refined fuel products, like gasoline, diesel and

jet fuel. In response, the U.S. is now temporarily lifting some

restrictions on buying Russian oil and petroleum products.

While we don't know when or how this conflict will end, a few

things are clear. One, you can rip up all of those oil supply

glut forecasts, and two, you might want to question previous

arguments about fossil fuels being inherently more reliable than

renewables.

U.S. consumers are already feeling the pinch from the energy

crisis, with average gasoline prices soaring 20% ‌since the war

began to $3.58 per gallon, as of Wednesday.

On the topic of price rises, U.S. inflation figures were

released on Wednesday, with the consumer price index rising 2.4%

in the 12 months through February, unchanged from the prior

month, despite a modest uptick in the month-over-month gain.

Given that this data predates the outbreak of the war in Iran,

markets paid the announcement little heed.

Today's release of personal consumption expenditures

inflation data may be watched a bit more closely, as it's the

Federal Reserve's preferred inflation gauge and is likely to

remain well above the 2% target.

Speaking of central banks, almost all of the big ones have

meetings next week, including the Fed, Bank of England, European

Central Bank, and the Reserve Bank of Australia, among others.

Only the RBA is expected to move - a hike is expected - but the

real news will be the communications. Markets will be keen to

hear how policymakers are approaching what is shaping up to be

the biggest crisis since the pandemic.

Finally, away from the Middle East, investors are increasingly

worrying about risks hiding in the opaque private credit

markets. JPMorgan this week said it was marking down the

value of some loans ‌to private credit funds. Worryingly,

parallels are beginning to emerge between today's private credit

tremors and those in U.S. subprime housing that led to the

2007-09 global financial crisis.

That certainly doesn't mean another financial meltdown is around

the corner, but it's a reminder that when exogenous shocks

occur, pockets of risk in financial markets are often revealed.

For more data-driven insights on markets and commodities, check

out Reuters Open Interest. You can learn:

* Why the Iran war may speed up Europe's gas divorce with

Russia

* The lessons from the Ukraine conflict that may embolden

ECB hawks

* Whether Europe's gas demand has been derailed or just

dented by the Mideast conflict

* How the oil price shock could be a politically toxic form

of redistribution in the U.S.

* Why it may be time for short sellers to make a comeback

I'd love to hear from you, so please reach out to me at .

This weekend, we're reading...

JAMIE MCGEEVER, ROI Markets Columnist: Amid Reuters' strong

coverage of the war in the Middle East, this recent piece by

fellow ROI columnist Ron Bousso stands out. It cuts to the heart

of why this crisis's economic and market impact will endure.

GAVIN MAGUIRE, ROI Global Energy Transition Columnist: This

recent report from JPMorgan, appropriately titled "Fighting

Words", covers all things energy.

ANNA SZYMANSKI, ROI Editor-in-Charge: This sharp analysis by

Reuters Breakingviews' Hugo Dixon outlines what the Iran

conflict means for Europe. Short answer - nothing good. But he

argues Europe can still emerge with a stronger hand if it treats

this as a wake-up call to strengthen and unite.

We're listening to...

MIKE DOLAN, ROI Finance & Markets Columnist: On this Bruegel

think tank podcast, former Dutch central bank chief Klaas Knot

discusses the ECB's best response to today's oil shock, explains

how it compares with 2022, and explores Europe's emerging

"Industrial Accelerator" policies.

RON BOUSSO, ROI Energy Columnist: This episode of

the Foreign Affairs podcast with American foreign policy experts

Nate Swanson and Richard Haass clearly explains how U.S.

relations with Iran have evolved over the years and how the

current war fits into the countries' decades-long tensions.

And we're watching...

JAMIE MCGEEVER, ROI Markets Columnist: In this wide-ranging

conversation with economist Joe Stiglitz on Jack Farley's

Monetary Matters podcast, the Nobel laureate shares his views on

the economic impact of the Middle East conflict, artificial

intelligence, tariffs, and the Trump agenda.

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Opinions expressed are those of the authors. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.