No guidance, but plenty to parse

Research evidence excerpt

No guidance, but plenty to parse

Barclays | US Outlook

suggests that markets are pricing a temporary risk premium rather than a prolonged disruption,

with longer-dated prices staying relatively anchored and the forward curve currently pricing an

average Brent price of $83/bbl for 2026, little changed from the levels before the re-escalation.

That said, our in-house energy analyst remains skeptical of supply fundamentals normalizing in

short order. The key upside risk is a renewed disruption to tanker traffic through the Strait of

Hormuz, which could materially tighten physical markets and push prices sharply higher.

Therefore, it is likely too early to view the oil price shock as being in the rear-view mirror, even if

June headline CPI data will likely show inflation peaked in May at 4.2% y/y. This re-escalation

also renews upside risks to core inflation, via the energy price pass-through, should oil prices

rebound in coming weeks amid unsuccessful negotiations.

FOMC increasingly concerned about inflation

The June FOMC minutes pointed to rising concerns about inflation. While participants expected

inflation to diminish, they saw risks that it remains persistently elevated — a risk that the Fed

staff viewed as "salient." Lingering effects of tariff increases, supply-chain disruptions related to

the closure of the Strait of Hormuz, and strong demand for goods and services related to the AI

investment boom were all seen as key causes of the recent elevated inflation prints, and several

participants expressed concerns that price pressures had become more broad-based.

Policymakers expected inflation to remain elevated in the near term and continued to view risks

to the inflation outlook as tilted to the upside, concerned that the strong demand for AI