Key insights
- Oil prices fell amid a fragile ceasefire, but the March CPI showed a significant jump in energy prices, with the energy index reaching its highest level since 2005. While headline CPI was in line with expectations, the surge in energy prices suggests potential inflationary pressures that could influence future Fed policy and impact US equities.
Investing.com -- Oil prices were near session lows in choppy trade on Friday, as a ceasefire between the U.S., Israel, and Iran remained fragile while the critical Strait of Hormuz remained largely shuttered.
The oil shock also showed its first signs of impacting the U.S. economy, with a key headline inflation reading jumping in March.
At 14:55 ET (18:55 GMT), Brent oil futures expiring in June, the global benchmark, were down 1.6% to $94.40 a barrel, while Crude Oil WTI Futures slipped 1.8% to $96.13 a barrel. Both contracts settled higher on Thursday after paring some gains, but were still set for more than 13% weekly losses.
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The impact of spiking oil prices was in the spotlight on Friday after the release of the March consumer price index (CPI) report.
According to the U.S. Bureau of Labor Statistics, headline CPI ticked up 0.9% M/M, in-line with the consensus. On a Y/Y basis, headline CPI rose 3.3%, lower than the expected rise of 3.4%.
As expected, the headline figures reflected a massive surge in energy-related prices, with that index jumping 10.9% M/M, the biggest increase since September 2005. The index for gasoline prices soared 21.2% M/M.
However, the core CPI figures, which exclude energy and food, weren’t as bad as feared.
"Although the reading seems hot on a first glance, today’s CPI data was no doubt better than expected. Amongst all the macro disruptions over the past month, a 3.3% YoY rise showcases continued relative resilience from the U.S. economy, especially given how fiery the external inflationary pressures have been," Yerbol Orynbayev, former World Bank governor of Kazakhstan, said.
"The energy index is now at its highest since 2005, and as restricted oil supply – vis-à-vis on-and-off closures to the Strait of Hormuz – continues to leave energy providers at a pinch, consumers will no doubt face tighter squeezes at pumps as the year goes on. I’ve said it before, and I’ll say it again: the longer this conflict rages on, the deeper the inflationary spiral the U.S. will find itself in," Orynbayev added.
Turning to the Middle East conflict, oil prices had plunged earlier this week after President Donald Trump announced a two-week ceasefire with Iran, contingent on the reopening of the strait, raising hopes for a resumption in disrupted oil flows. The temporary halt in hostilities has put oil prices on track for their biggest weekly decline since June 2025, although crude is still well above levels before the start of the joint U.S.-Israeli assault on Iran in late February.
Within hours of the truce, Israel launched heavy airstrikes on Iran-aligned Hezbollah militants in Lebanon, arguing that its conflict with Hezbollah was not covered under the agreement. Iran accused Israel of violating the ceasefire, but things took a turn for the positive on Thursday after Israel said it would begin direct negotiations with the Lebanese government over a possible disarmament of Hezbollah. Prime Minister Benjamin Netanyahu stressed, however, that there is "no ceasefire" with Lebanon.
Tanker traffic through the strait is at a virtual standstill, with Reuters reporting that shipping through the narrow waterway off of Iran’s southern coast was well below 10% of normal volumes on Thursday. Iran, whose chokehold on the strait has threatened the flow of around a fifth of the world’s oil, has told vessels that they must keep to its territorial waters while making any sailings.
Several Asian countries are heavy importers of crude products which traverse the strait, while Europe uses natural gas from Persian Gulf nations which have been targeted by Iranian attacks.
Bombardments of Saudi energy facilities have also slashed the kingdom’s oil output capacity by about 600,000 barrels per day and throughput on its East-West Pipeline by roughly 700,000 barrels per day, Saudi state news agency SPA reported on Thursday.
Investors are now eyeing planned U.S.-Iran talks this weekend in Pakistan, though Iranian media said Tehran had denied reports that a delegation had arrived for the talks. Reports also suggested that talks would remain suspended as long as Washington does not uphold commitments related to a ceasefire in Lebanon.
Earlier, Trump stepped up his rhetoric against Tehran, warning it against imposing fees on vessels transiting the Strait of Hormuz and criticizing Iran for doing a “poor job” of allowing energy supplies to flow. The Wall Street Journal, citing an Iranian lawmaker, said the country was raking in $2 million from tolls charged on some ships.
Ayushman Ojha and Scott Kanowsky contributed to this article