World economic highlights for the week of April 4-11, 2026: US-Iran peace talks expected; oil falls sharply; US inflation accelerates

After a ceasefire agreement was announced on April 7, the United States and Iran are expected to hold peace talks in Islamabad, Pakistan, with Pakistan hosting as mediator. Against this backdrop of continued uncertainty in the Middle East, crude oil prices fell for the week, recording the largest weekly declines in years.

Oil prices drop sharply as Hormuz remains constrained

Brent crude futures settled at $95.2 per barrel in London, while WTI futures were at $96.57 per barrel. Brent fell 12.7% for the week, the largest weekly decline since August 2022. WTI dropped 13.4% for the week, the largest weekly fall since April 2020.

The Hormuz Strait remains closed, with traffic at less than 10% of normal levels, according to vessel-tracking data compiled by Reuters. Despite the weekly decline in futures, Brent spot prices remained around $120 per barrel, reflecting tight physical supply in the global market.

Inflation signals keep pressure on rate expectations

US inflation data pointed to persistent price pressures. The Consumer Price Index rose 0.9% in March from February, the largest monthly increase since June 2022. The Personal Consumption Expenditures (PCE) price index rose 2.8% year-on-year in February, above the Fed’s 2% inflation target.

Investors have largely shifted away from expecting Fed rate cuts in 2026.

China’s inflation picture turns as energy costs rise

China is showing signs of moving from deflation toward inflation as energy prices rise due to the Middle East conflict. Statistics from the National Bureau of Statistics (NBS) showed March producer price index (PPI) up 0.5% year-on-year, ending a 41-month decline streak.

Analysts warn that cost-push inflation pressures may complicate policymaking in China, where domestic demand remains weak and foreign demand may slow because of the conflict.

Dollar weakens; gold mixed amid central bank selling

The US dollar weakened after the truce and talks were agreed. The Dollar Index fell about 1.3% for the week and about 1.7% over the past month.

Central banks, including Russia and Turkey, sold gold, weighing on the precious metals market. Gold still posted a modest weekly gain as oil prices fell amid Middle East tensions.

Broader macro risks: stagflation warnings and energy shock concerns

Even as the US and Iran agreed to pause hostilities and enter peace talks, warnings about stagflation were issued by the IMF, the EU, and JPMorgan Chase. Analysts and policymakers expect the Gulf conflict to leave lasting effects on the world economy, and that oil prices may take time to return to pre-war levels.

Concerns also persist that energy shocks could become a fiscal crisis. Europe and Asia are implementing measures such as fuel subsidies and cuts to fuel taxes to address the energy shock.

Supply outlook: supplementary sources and delayed restoration

Russia and Iran have become important supplementary supply sources during the period of US waivers, and the US is considering extending exemptions.

In the Gulf, oil production remains under pressure due to damaged infrastructure from Iranian attacks. Analysts forecast that even after the conflict ends and Hormuz reopens, it could take months or years to restore output.