Oil markets react to renewed strait disruption
Global oil prices surged more than 9% on Monday following President Trump's announcement that the US is reinstating a blockade on Iran in the Strait of Hormuz and imposing a 20% toll on all cargo shipped through the waterway. Brent crude, which had fallen to around $82 a barrel during a brief ceasefire, jumped sharply as tanker traffic faced fresh disruption. The international oil benchmark remains well above the $69 average recorded last year.
The spike threatens to erase the relief consumers felt from June's inflation data. The Consumer Price Index slowed to a 3.5% annual increase in June, with prices marking their biggest drop from a month earlier since 2020. Core inflation also moderated, giving Federal Reserve Chairman Kevin Warsh some room to focus on fighting inflation without immediate rate pressure.
Economic fallout spreads beyond energy
The IMF projected world output growth would fall to 3% for 2026, a number pushed down by high commodity prices. The disruption is already hitting American consumers — a quarter of working-age adults now use credit cards to purchase groceries but struggle to repay their debts, according to a new study. Louisiana farmers face soaring energy costs, with some unsure if their businesses will survive.
Meanwhile, Volkswagen announced plans to cut up to 100,000 jobs globally as the German automaker faces a steep fall in profits and tough competition from China. The group, which includes Porsche and Audi, joins a growing list of companies restructuring in response to the uncertain economic environment.
Housing market shows strain
Sales of existing homes fell by 2.4% in June compared to May, according to the National Association of Realtors, a setback during what is meant to be the housing market's busy spring season. A bipartisan housing bill automatically became law after President Trump declined to sign it, offering local governments and builders incentives to make incremental changes to address the housing shortage.