Recap | 13 March 2026

48 minutes ago
12 min read

| Iran digs in as US brings additional forces to the Middle East

| Regional war and Strait of Hormuz blockage trigger unprecedented disruption

| Naval escorts eyed for strait as countries address oil and gas shortages

| Europe, Ukraine criticize US sanctions reprieve for Russia

| Oil resumes advance as stocks and bonds languish

| Persistent pre-war inflation, slowing growth present dual risks

| White House, Senate push to address housing affordabilty

| Federal judge quashes DOJ subpoenas targeting Powell

| Lead US and Chinese negotiators prepare for Trump-Xi meeting

| US arms sales and changes in China's air exercises highlight Taiwan question

| Cuba beginning talks with US as oil blockade deepens economic crisis

| Iranian attacks, Russian blackouts highlight cyber risks in war

| Senate to debate SAVE Act amid White House pressure

| Administration takes California to court over power to regulate emissions

| CFTC requests public comment for prediction markets regulation

Commentary - not advice.

EDWARD VON DER SCHMIDT

| Disclaimers

Headlines

Iran digs in as US brings additional forces to the Middle East

Although the US has dramatically reduced the frequency of Iranian counterattacks, ubiquitous drones and effective control of the Strait of Hormuz have given Iran staying power and leverage. A statement from the new supreme leader - who has not appeared in public - vowed to maintain pressure on neighbors and global oil markets while US and Israeli strikes continued.

Moving a Marine Expeditionary Unit trained in amphibious assaults as well as additional destroyers into the Middle East, President Trump announced strikes on Kharg Island, where Iran processes the vast majority of its oil exports. The US left energy infrastructure intact for now as Iran threatened retaliation against neighboring countries' infrastructure in response.

The US has achieved measurable success in limiting Iran's missile capabilities, but regime change and seizure of uranium stockpiles appear improbable absent operations on the ground. The specific criteria for ending the conflict remain unclear. President Trump has said that the fighting will go on "as long as it's necessary" and will end "when I feel it in my bones".

Comment: While attacking Iran's oil infrastructure would cut off the regime from its principle revenue, doing so would exacerbate the oil crisis as China and other buyers of Iranian crude would need to source shortfalls from a more limited global pool.

Any retaliation against regional oil infrastructure or complete closure of the strait by a cornered Iran would create an even greater shock. Such a risk would seem unpalatable given the calamitous impact an extended oil crisis would have on the global economy (i.e., severe stagflation).

Sources:

Trump says US bombed military sites on an island vital to Iran's oil network (AP)
US orders 2,500 Marines and an amphibious assault ship to Mideast after almost 2 weeks of war (AP)
Iran war disrupts energy supplies as Iran's new leader resolves to keep fighting (AP; 3/12)
Trump threatens to strike Iran's Kharg Island oil network if shipping lanes remain blocked (Reuters)
Exclusive: With Iran war exit elusive, Trump aides vie to affect outcome (Reuters)
Iran unleashes oil shock to blunt US firepower (Reuters)
Iran's new supreme leader vows to keep Hormuz shut, Netanyahu issues threat (Reuters; 3/12)
US Hits Military Targets on Iran's Kharg Island as War Escalates (Bloomberg)
Iran Repeats Retaliation Threat as US Hits Kharg Island Military (Bloomberg)
Emboldened by Oil Shock, Iran's Leaders Play Diplomatic Hardball (WSJ; 3/12)
More Marines and Warships Head to Middle East as Hormuz Mission Intensifies (WSJ)

Regional war and Strait of Hormuz blockage trigger unprecedented disruption

Meanwhile, the theater of war has expanded amid Israel's offensive against Hezbollah in Lebanon and Iranian proxies leveling attacks in Iraq. The Revolutionary Guard has repeatedly struck the UAE, Qatar, and others for hosting US assets and military installations, precluding mediation channels.

The largest disruptions have emanated from curtailed energy production and Iran's stranglehold over the Strait of Hormuz, though which a fifth of the world's oil once passed. The International Energy Agency (IEA) characterized the effective closure for all but Iranian crude as causing the largest disruption dating back to its inception in 1974. The projected global production loss for March far exceeds the strategic reserves to be released.

Not only has the blockage and regional fighting created acute energy shortages that will propagate through industrial supply chains and directly affect consumers, but critical agriculture inputs such as fertilizer have also been ensnared to introduce risks to food supply and prices.

Sources:

Iraq is caught in the crossfire of the Iran war, with attacks by both sides on its soil (AP)
What to know about the Strait of Hormuz, a key passageway essential for global energy supply (AP; 3/12)
Iran's Shi'ite allies step up strikes despite weakened hand (Reuters; 3/12)
Ships must coordinate with Iran's navy to pass through Strait of Hormuz, foreign ministry says (Reuters; 3/12)
Iran-backed Iraqi group claims responsibility for downing US military aircraft (Reuters)
Israel strikes heart of Beirut, signals long campaign (Reuters; 3/12)
UAE says Iran must halt attacks on neighbours to allow diplomacy (Reuters)
Biggest global oil supply disruptions in history (Reuters)
Iran War Causes Biggest-Ever Oil Market Disruption, IEA Says (Bloomberg; 3/12)
Middle East War Is Causing Largest Oil Supply Disruption in History, IEA Says (WSJ; 3/12)

See also:

Fuel Shortages From War Begin to Threaten Global Food Supply (Bloomberg)
Fertilizer Stocks Jump With Shipments Stuck at the Strait of Hormuz (WSJ; 3/12)

Naval escorts eyed for strait as countries address oil and gas shortages

Countries have announced and are considering various measures to ameliorate oil and gas shortages, including the release of strategic inventories and implementation of temporary price caps, wherein governments subsidize purchases to lower the effective prices paid. The US has considered easing restrictions on domestic maritime shipping or even going so far as to directly intervene in markets.

In the meantime, countries are evaluating the mechanics of military escorts for commercial vessels to facilitate safer passage through the narrow strait.

Sources:

What to know about the Jones Act as Trump considers a waiver during the Iran war (AP)
Governments globally roll out measures to blunt effect of Iran war energy shock on consumers (Reuters)
Trump says US will soon escort ships through strait as oil prices roil global economy (Reuters)
Crude futures turn positive on continued Hormuz closure (Reuters)
Oil's Crisis Deepens as Traders Fret on Longer Hormuz Blockage (Bloomberg)
US to Ease Shipping Rule in Bid to Tame Spiraling Fuel Prices (Bloomberg)
US Officials Have Discussed Trading Oil Futures, Burgum Says (Bloomberg)

See also:

US Allows Venezuela to Sell Fertilizers as War Crimps Supply (Bloomberg)

Europe, Ukraine criticize US sanctions reprieve for Russia

The US decision to grant Russia temporary sanctions reprieve to sell its seaborne oil drew criticism from European leaders and Ukraine. Russia's battered finances stand to benefit greatly from higher oil and natural resource revenues to the extent higher prices can be exploited.

Comment: More pointed rhetoric from Europe has revealed the continent's frustration with its transatlantic partner.

Sources:

US eases some Russian oil sanctions but crude prices stay high (AP)
Zelenskyy says US 30-day waiver on Russia oil sanctions is 'not the right decision' (AP)
US issues 30-day sanctions waiver for purchase of Russian oil at sea (Reuters; 3/12)
European allies riled as US loosens Russia oil sanctions (Reuters)
US wants to 'divide Europe', EU's Kallas tells FT (Reuters)
US Allies Criticize Trump's Move to Lift Russian Oil Sanctions (Bloomberg)
Putin's 'Hidden Hand' Guides Iran's Strikes in Widening War (Bloomberg; 3/12)
War Triggers Growing Rift in Trans-Atlantic Alliance Over Russia (WSJ)

See also:

Carney announces billions for defense and infrastructure in Canada's North (AP; 3/12)
Ukraine opens battlefield data access to allies' AI models (Reuters; 3/12)
Romania signs deal with Ukraine on joint defence production including drones (Reuters; 3/12)
Zelenskiy says US sought postponement of talks on war settlement, Ukrainian media reports (Reuters)
US Sends Intercept Drones Used in Ukraine to Blunt Iran Strikes (Bloomberg)

Markets & Economies

Oil resumes advance as stocks and bonds languish

The prospect of a sustained oil shock and attendant threats to inflation and economic growth weighed on equity markets contending with AI disruptions and private credit concerns, contributing to global outflows.

While the US dollar has benefitted from safe haven flows by investors seeking to preserve purchasing power and avoid risk contagion, bond yields marched higher with price stability under fire.

Sources:

US stocks lose ground as war with Iran keeps pressure on oil prices (AP)
Wall Street closes lower, posts weekly loss as war on Iran fuels inflation worries (Reuters)
Global equity funds see highest funds as Iran conflict reverberates (Reuters)
Dollar Soars to Highest Level This Year as Oil Stirs Haven Bid (Bloomberg)
Brent Crude Closes Above $100 for Second Straight Session (Bloomberg)
Oil Markets Brace for Lasting Turmoil in the Gulf (WSJ)
Stocks Suffer Third Straight Weekly Loss as Investors Brace for Longer Conflict (WSJ)
Government Bonds Look Vulnerable as Lengthy Period of High Oil Prices Looms (WSJ; 3/12)

See also:

The Hottest New Crypto Trade Is 24/7 Oil Futures (Bloomberg)

Persistent pre-war inflation, slowing growth present dual risks

Personal income and spending data from the Commerce Department showed PCE inflation ticking higher to 2.8% annually (core: 3.1%) prior to the onset of war in Iran. Business expenditures underwhelmed.

At the same time, fourth quarter GDP growth estimates were halved (to 0.7%). Private domestic final purchases - a more representative indicator of underlying activity favored by the Fed - was marked down 0.5pp, to 1.9%.

Comment: With declining sentiment and tenuous labor market stability, retreating growth and resurgent inflation are likely to give the Fed pause until the outlook clears.

Note that the Fed's next monetary policy decision will be announced Wednesday, with a host of other central banks meeting this week (BCB, BOC, ECB, BOE, Riksbank, SNB, BOJ, RBA, BI; from WSJ)

Sources:

Key inflation gauge worsened in January, before Iran war lifted gas prices (AP)
US job openings rise to a better-than-expected 7 million despite sluggish labor market (AP)
Cracks emerged in a resilient US economy before war in Iran sent oil prices rocketing (AP)
US consumer spending increases in January, Iran war to add to inflation pressures (Reuters)
US consumer sentiment falls in early March as Middle East war weighs (Reuters)
US job openings rise in January, but hiring tepid (Reuters)
US fourth-quarter GDP growth revised down to 0.7% (Reuters)
Underlying Inflation Was Stubborn in January by Fed's Preferred Metric (WSJ)
Consumer Sentiment Declined This Month, Per Michigan Survey (WSJ)
Economy Was Even Slower in Fourth Quarter, New Estimate Shows (WSJ)

See also:

Exclusive: Meta planning sweeping layoffs as AI costs mount (Reuters)

White House, Senate push to address housing affordabilty

The White House and Senate have taken aim at improving housing affordability. President Trump issued executive orders to reduce regulatory requirements and encourage construction and small bank lending for mortgages. The Senate voted overwhelmingly to cut back regulations, allocate funds, and institute investment property guardrails; the latter might complicate passage in the House.

Comment: Limited supply is the biggest impediment to more affordable housing.

Sources:

Trump signs executive orders aimed at addressing home affordability concerns ahead of midterms (AP)
Average US long-term mortgage rate rises to 6.11%, back to where it was 5 weeks ago (AP; 3/12)
Senate passes bipartisan housing bill to improve access and affordability (AP; 3/12)
Trump orders agencies to cut red tape on homebuilding, mortgages (Reuters)
Trump Signs Orders Aimed at Mortgage Access, Housing Costs (Bloomberg)
Senate Passes Housing Bill With Trump Investor Ban, Setting Up Clash in House (Bloomberg; 3/12)

Federal judge quashes DOJ subpoenas targeting Powell

A federal court in Washington denied DOJ subpoenas seeking information about Federal Reserve renovations in its criminal probe of Chair Powell; the DOJ intends to appeal.

Notably, Powell's attorneys floated the idea of Powell staying on as a Governor after his tenure as chair ends in May. Senator Tillis repeated his pledge to block Kevin Warsh's nomination until the DOJ investigations are resolved.

Comment: Taken together, a resolution of the criminal inquiry would allow Warsh to succeed Powell, who could then step down from the Fed. This would grant President Trump an opportunity to nominate another Governor and potentially wield greater influence over monetary policy, which in turn might delay Powell's departure...

Sources:

Judge quashes subpoenas in Justice Department's investigation of Fed chair Jerome Powell (AP)
Judge blocks subpoenas against Fed Chair Powell, DOJ to appeal (Reuters)
Powell's attorneys discussed the possibility of his remaining on Fed board (Reuters)
Judge Rejects Subpoenas of Fed in Powell Case; DOJ to Appeal (Bloomberg)
Judge Throws Out Justice Department Subpoenas to Federal Reserve (WSJ)

Around the World

Lead US and Chinese negotiators prepare for Trump-Xi meeting

Treasury Secretary Bessent and USTR Greer are traveling to Paris to meet with China's Vice Premier He Lifeng this weekend to prepare for President Trump's summit with President Xi at the end of March. Greer told CNBC that the US is seeking to promote stable trade relations and ensure the flow of rare earths and critical minerals.

Recently announced Section 301 tariff investigations have elicited a rebuke from China, with a relaxation of technology export restrictions perhaps intended to smooth frictions.

Sources:

Bessent will meet China's vice premier in Paris ahead of Trump's visit to Beijing (AP)
China slams US trade probe ahead of Paris talks (Reuters)
US Commerce Department withdraws planned rule on AI chip exports, government website shows (Reuters)
Trump-Xi Agenda to Be Shaped as Negotiators Meet in Paris (Bloomberg)
US Withdraws Draft Rule That Called for Global AI Chip Permits (Bloomberg)
Greer Says US Seeks Stability in China Ties Ahead of Paris Talks (Bloomberg)
New U.S. Trade Probes Raise Concerns in Asia (WSJ)
Exclusive: China's ByteDance Gets Access to Top Nvidia AI Chips (WSJ; 3/12)

See also:

US launches unfair-trade probes to rebuild Trump's tariff pressure (Reuters; 3/11)
Carmakers Warn US Over Chinese Autos Ahead of Trump-Xi Summit (Bloomberg)

US arms sales and changes in China's air exercises highlight Taiwan question

Taiwan remains a point of contention, with US arms sales having upset Beijing in the past. China has made reunification with the island a central red line while federal law requires that the US assist Taiwan with its self-defense. The direct question of sovereignty is generally avoided under a policy of 'strategic ambiguity'.

China's routine air incursions have also slowed noticeably, sowing confusion.

Beyond Taiwan, the US and China continue to compete for strategic influence through trade and security channels.

Sources:

What to know about the falloff in China's military flights around Taiwan (AP)
Taiwan parliament authorises signing of stalled $9 billion US arms deals (Reuters)
Exclusive: New US weapons for Taiwan could be approved after Trump's China trip; sources say (Reuters)
Mysterious Lull in Chinese Military Flights Leaves Taiwan Guessing (WSJ; 3/12)

See also:

First train to Pyongyang in six years leaves Beijing as neighbours revive link (Reuters; 3/12)
China's mediation eases fighting between Pakistan, Afghanistan, sources say (Reuters; 3/12)
Chile, US eye collaboration on rare earths and other critical minerals (Reuters; 3/12)
Trump nominates State Dept official to lead diminished US global media agency (Reuters; 3/12)
NATO-partner Serbia admits buying Chinese missiles after photos leaked (Reuters)

Cuba beginning talks with US as oil blockade deepens economic crisis

Cuba's president acknowledged that the country was engaged in discussions with the US after Secretary Rubio held talks in February. The US blockade has exerted substantial pressure as countries have pulled back to avoid the White House's ire.

Sources:

Cuba's president confirms US talks as island's energy and economic crises intensify (AP)
Cuba opens talks with U.S. as oil blockade takes a toll (Reuters)
Cuba Acknowledges Negotiations With Washington (WSJ)

See also:

Democratic senators file war powers resolution to check Trump on Cuba (AP; 3/12)

Odds & Ends

Iranian attacks, Russian blackouts highlight cyber risks in war

Cyber attacks attributed to Iran-linked groups have called attention to digital warfare and the vulnerability of information systems. Mass internet blockages have also revealed businesses and citizens' dependence on digital communications.

Sources:

US faces elevated terrorism threats against backdrop of Iran war and cuts at FBI, Justice Department (AP)
Iran-linked hackers take aim at US and other targets, raising risk of cyberattacks during war (AP; 3/12)
Iran war puts many in US on high alert, but synagogue attack shows limits (Reuters)
Stryker flags disruption to orders, manufacturing a day after cyberattack (Reuters; 3/12)

See also:

Moscow businesses struggle as Russia restricts cellphone internet services (AP)
Poland says failed cyberattack on nuclear centre may have come from Iran (Reuters; 3/12)
US Army Awards Anduril Contract Worth as Much as $20 Billion (Bloomberg)

Senate to debate SAVE Act amid White House pressure

The Senate plans to bring the SAVE Act to the floor for debate, but relaxation of the filibuster and passage are not assured. The legislation would introduce strict documentation requirements for registration and voting with direct consequences for control of Congress in November's midterm elections.

Sources:

Under pressure from Trump, Republicans plan long talkathon on voting bill (AP; 3/12)

Administration takes California to court over power to regulate emissions

The US is suing California over its ability to impose emission standards in a potentially landmark case implicating states' rights.

Sources:

US sues California over zero emission vehicle, greenhouse gas rules (Reuters; 3/12)

CFTC requests public comment for prediction markets regulation

The CFTC is soliciting public comment on regulations for prediction markets, which have also been deemed gambling in court and may be subject to other jurisdiction at the state level.

Comment: These regulations will ultimately determine market structure and how contracts will be defined and traded.

Sources:

US commodity regulator kicks off rulemaking for prediction markets (Reuters; 3/12)

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