Highlights of the week: energy prices spike, Fed pause, Dubai hotels cut prices

Escalation in the Middle East has triggered a spike in oil and gas prices and heightened the risks of a prolonged energy shock. Regulators and governments are looking for ways to contain prices, from easing sanctions on Iranian oil to temporarily repealing the Jones Act in the US. Meanwhile, hotels in Dubai are cutting prices - occupancy in the emirate has fallen from 90% to 16% due to the shelling. Against this backdrop, central banks are keeping rates on hold, but signaling rising inflation risks and high uncertainty. The main events from March 16 to 20 - in our review.

The U.S. Treasury Department has allowed the easing of sanctions on Iranian oil already at sea. This could release about 140 million barrels, said the head of the department Scott Bessent. A similar move on Russian oil could add about 130 million more barrels of supply. The measure is aimed at curbing energy prices amid escalation in the Middle East, but details of the mechanism remain unclear.

On the background of the news, the growth of oil prices slowed down on Thursday, February 19. However, already on Friday, after Iran's refusal to discuss the resumption of shipping in the Strait of Hormuz, the cost of Brent oil rose above $113 per barrel, quotations of U.S. oil WTI added 3%, exceeding $98.

What else is there to read about it?

- Against the backdrop of the US-Israeli conflict with Iran and the blockade of the Strait of Hormuz, commodity markets are experiencing a shock comparable to the crisis of the 1970s. Journalist Petr Kiryan analyzed who loses and who gains in his column "The war in Iran has shocked commodity markets. But some are suffering a blow, while others are making money.

On March 18, the U.S. Federal Reserve left the rate at 3.5-3.75% for the second time in a row, which fully coincided with market expectations. The regulator noted steady economic growth, but weak labor market and "somewhat elevated" inflation, as well as high uncertainty due to the conflict in the Middle East.

Now the key question for investors is not when the rate cuts will start, but whether they will happen at all this year. The median forecast of FOMC members suggests one cut - by a quarter percentage point in 2026 and another, similar one in 2027. While traders in the futures market point to a nearly 50 percent chance of a 0.25 percentage point rate hike by October, the Financial Times wrote.

The European Central Bank (ECB) left the rate at 2% for the sixth time in a row, pointing to the growth of inflationary risks due to rising energy prices amid the conflict in the Middle East. Similar decisions were made by the Bank of England, the Bank of Japan, the Central Bank of Sweden and the Swiss National Bank. The ECB emphasized that short-term inflation may accelerate, and the risks to economic growth are shifted downward.

What else is there to read about it?

- Weak labor market data and accelerating inflation have dashed hopes for a quick easing of monetary policy. What small-cap ETFs can become a protective asset against the background of global turmoil? - said analyst Aldiyar Anuarbekov in the article "Reduce risks: 4 small-cap ETFs for protection when the U.S. economy slows down".

Hotels in Dubai are cutting prices after a sharp drop in occupancy due to massive shelling by Iran, the Financial Times wrote. According to analysts Lighthouse Intelligence, last week room rates in April and May fell by more than 11% from pre-pandemic levels. Hotel occupancy rates in the emirate fell from 90% in the high season to about 16% by March 17, Lighthouse Intelligence noted.

In addition to discounts, some hotels provide guests with free food and drinks. Falling demand is also forcing businesses to cut staff costs, says the FT. According to the publication, many employees have been sent on unpaid vacations or forced to go on planned leave early.

What else is there to read about it?

- Iran is attacking the Emirates almost daily with drones and missiles. How do investors react to this and what happens to real estate? - Oninvest correspondent Lyudmila Milevskaya investigated in the article "Drones and deals: should we wait for discounts on the real estate market in Dubai".

Arkady Volozh's cloud provider Nebius Group has raised $4 billion, increasing the placement volume from the initially planned $3.75 billion. The funds will be used to develop infrastructure, in particular, to build data centers. The deal includes two tranches: $2.25 bln maturing in 2031 (coupon 1.25%) and $1.75 bln maturing in 2033 (2.625%). The placement is expected to close on March 20.

Nebius Group has also signed a five-year agreement with Meta Platforms for up to $27 billion. Nebius will provide $12 billion in dedicated computing capacity from 2027 based on NVIDIA's Vera Rubin platform, as well as create up to $15 billion in additional capacity. Some of the infrastructure will be sold to third-party customers, with Meta buying the rest.

U.S. President Donald Trump has suspended for 60 days the Jones Act, which mandates that only U.S.-built vessels carry cargo between U.S. ports. Now such transportation - including oil and gas - is temporarily allowed for foreign ships as well. The measure is designed to reduce logistics costs and curb the rise in energy prices amid the conflict with Iran.

The decision should simplify domestic fuel supplies, but its effect may be limited. There are not enough suitable refineries in the US to process the shale oil produced, and structural market constraints remain, explained Dalip Singh, an economist at PGIM management company. The suspension of the law is seen as a short-term measure to prevent shortages and support the energy system in times of conflict.

Micron Technology reported a sharp rise in revenue in the second fiscal quarter of fiscal 2026 - nearly tripling to $23.9 billion, well above expectations, amid a frenzy of demand for AI memory. The company also gave a strong upward revenue forecast for the current quarter - about $33.5 billion. However, Micron will have to dramatically increase investment to meet demand, with capex set to exceed $25 billion this fiscal year. Analysts' average forecast was for $23.7 billion, Bloomberg noted.

Despite the strong results, the stock was down more than 5% in the post-market - investors were alerted by rising costs. The memory sector remains one of the key beneficiaries of the AI boom: a shortage of chips keeps prices rising and the market is controlled by three players - Micron, Samsung and SK Hynix - with expectations of continued strong demand for years to come.

What else is there to read on the topic of AI?

- AI primarily threatens areas with a high proportion of female employees, as well as professionals with higher education and high incomes, according to a study by Anthropic. Sergey Kuznetsov, writer and co-founder of Le Sallay, discussed what to teach children in these conditions in his column "AI will destroy 34 million jobs in the U.S. by 2030. What to prepare children for?".

This article was AI-translated and verified by a human editor