It’s bad out there

S&P 500 futures were down 0.55% this morning after the index closed flat yesterday. The blue chips are down 1% year-to-date. There was a mass selloff of stocks globally this morning as the price of oil rose past $100 again. All major indexes in Europe and Asia were down today before the opening in New York. Worst hit was Japan where the Nikkei 225 fell 1%. Oddly, Bitcoin has done better than stocks or gold since the beginning of the war.

TOP STORIES

IRAN

No one thinks oil is going back to normal anytime soon

The price of oil sat at $96 this morning after briefly going over $100 again. (It was around $90 the day before.) The spike occurred despite the International Energy Agency releasing a record 400 million barrels of oil and the U.S. uncorking a further 172 million barrels from its Strategic Petroleum Reserve. 

Oil is trading like a meme stock. “In the absence of a coherent U.S. strategy to reopen the Strait of Hormuz, investors are likely to focus on Iranian actions as the market driver,” UBS’s Paul Donovan said this morning. KPMG chief economist Diane Swonk worries that the conflict will drag on for up to six more months, sending oil prices north of $130 per barrel. Some analysts think it could hit $200. LPL Financial’s Adam Turnquist believes the oil market has “mirrored its 2022 behavior,” when Russia invaded Ukraine, according to an email seen by Fortune. “The threat of conflict in early 2022 pushed prices from roughly $65 in early December to a peak of $139 as the war unfolded.” MacQuarie analysts Thierry Wizman and Gareth Berry told clients that oil will trade like a “meme stock” “until the fighting ends, perhaps at month end.”

• The price of gas in California hit $5.20 this week.

Chart via TradingEconomics.com

President Trump said the war with Iran will end “soon,” so why isn’t oil coming down?

The short answer: The global oil market is a disaster area right now because it isn’t safe to move tankers around the seas of the Middle East.

• U.S. forces are not in control of the Strait of Hormuz despite the pounding that Iran has taken. In the Navy’s most recent assessment of the strait, officials said military escorts would “only be possible once the risk of attack was reduced.” In other words: the Strait of Hormuz is too dangerous for the U.S. Navy.
• Oman evacuated its Mina Al Fahal terminal. Around 1 million barrels a day are exported from that port.
• 30 large ships with the capacity to carry 2 million barrels each are making a run for it to Saudi Arabia’s Red Sea coast and the Bab al-Mandab Strait. It’s further away from Iran than Hormuz, but Iran and its Houthi proxies are still able to strike ships maneuvering through that pinch point.
• Three more cargo ships were attacked overnight.
• A set of storage tanks in Bahrain were torched.
• Iran, however, is successfully exporting its oil, largely via its shadow fleet of ships that turn off their transponders. “When a vessel turns off its transponder and goes dark, it doesn’t trigger an alarm at some global maritime headquarters. There is no such headquarters. The ship simply disappears from the map. Every map,” Charles Edward Gehrke writes for Fortune.
• Only Iran knows where the mines are.
• Separately, this Iranian hack of U.S. medical device company Stryker has caught a lot of people’s attention.

In Asia, a four-day week

The fallout is hitting Asia hard. The continent imports 70% to 90% of its oil from the Middle East and prices are so high that governments and companies are ordering four-day work weeks, school closures, work from home demands, price caps, and other extreme measures. “Thailand ordered civil servants to take the stairs rather than the elevator, and … it increased the air-conditioning temperature to 27 degrees Celsius [about 81F],” according to Fortune’s Angelica Ang.

ARTIFICIAL INTELLIGENCE

Amazon let AI write its code and now it doesn’t know what’s under the hood

Amazon held a mandatory meeting for a “deep dive” into multiple service outages, some due to the use of AI in coding its software, Fortune’s Sasha Rogelberg writes. Amazon said there was a “trend of incidents” in the past few months with a “high blast radius” and relating to “Gen-AI assisted changes.” Customers were unable to check out, view prices for goods, or access their Amazon accounts due to faulty “a software code deployment.” Elon Musk naturally couldn’t help himself: “Proceed with caution,” he warned on X. 

• Exclusive: Oro Labs, which uses AI for corporate procurement, raises $100 million. The fundraise was led by Goldman Sachs Growth Equity and Brighton Park Capital, Fortune’s Jeremy Kahn reports. Oro declined to disclose its valuation following the fundraise. The new capital raise brings the total amount of money the startup has raised to date to $160 million.

CHART OF THE DAY

Highly misleading but ‘eerie’ nonetheless

Deutsche Bank knows that this chart of U.S. inflation is a result of manipulating the data on the horizontal axis and both(!) vertical axes and yet … are we back in the 1970s again? 

NUMBER OF THE DAY

3%

ING’s James Knightley says “we suspect that U.S. headline inflation will move back above 3% during the second quarter and may not drop below 3% until the end of the year.” Don’t hold your breath for further Fed interest rate cuts, in other words. 

QUICK HITS

• It’s thanks to Social Security that wealth inequality isn’t worse, Wharton economist says. Trump’s policies will push it to insolvency in 6 years by Tristan Bove 
• This startup is helping tech giants and real estate developers find land for data centers—and using its own GPU cluster to do it by Jessica Mathews
• MacKenzie Scott gave away more than $7 billion last year—but her secretive style got her snubbed from a top donors list by Sydney Lake
• Trump says the U.S. will open its first new oil refinery in nearly 50 years as the U.S. military avoids bombing Iran’s oil infrastructure by Jacqueline Munis 

THE FRONT PAGES TODAY

Trump tells Axios there’s ‘practically nothing left’ to target in Iran – Axios

U.S. at fault in strike on school in Iran, preliminary inquiry says – NYT

Ex-bankers sue Deutsche for £600mn over probe that led to Italian convictions – FT

Trump administration launches Section 301 trade probes into Mexico, China, EU, others – CNBC

Top US drone expert says Iran could make deadly California strike any second —’We’re extremely vulnerable’ – New York Post

ONE MORE THING

1 in 5 Gen Zers bring mom or dad to job interviews

Fortune’s Orianna Rosa Royle reports 20% of young job candidates say a parent has contacted a potential employer or recruiter on their behalf. Think cold-calling a hiring manager to put in a good word or emailing a recruiter to chase an application their child never followed up on. And a third said their parents helped them negotiate their salary, with 10% letting mom or dad negotiate directly with the boss themselves. Yikes.