Financial markets regularly utilize ‘oil shock’ and ‘stagflation’ as scare tactics when predicting the worst. Energy markets are in upheaval as the Middle East crisis enters its second week with no conclusion in sight.

On Monday, crude oil prices reached their highest level since the Ukraine invasion four years ago, surpassing $100 per barrel. If triple-digit oil prices persist, the U.S. and global economies could suffer and central bankers face stagflation.

The Iran war is worsening the oil issue. Fuel prices in the U.S. are already above $3 per gallon and are expected to rise further. Overnight, President Donald Trump tweeted that rising oil prices were a minor cost for winning the battle, despite potential voter doubts.

Central banks and investors are concerned about the recent inflationary surge following Friday’s unexpectedly dismal U.S. jobs report. The February weather may have skewed the figures, but the labor market has stalled with few good indications.

This threatens ‘stagflation’—slow or no growth and rising prices. How the Fed and other central banks react is unknown. Probably just stand pat longer, which will please absolutely no one.

Rising inflation concerns have impacted global bond markets, causing a selloff last week and raising rates, particularly in Britain, where two-year gilt yields are expected to reach their highest one-day gain since 2022.