Energy crunch threatens inflation progress and complicates rate relief for borrowers
Global mortgage markets are on alert in early April as International Energy Agency (IEA) chief Fatih Birol warned that the oil supply shock would deepen, raising the risk of renewed inflation and delayed rate relief for borrowers.
The closure of the Strait of Hormuz after US and Israeli strikes on Iran in late February choked a route that normally carries roughly a fifth of global oil trade. Brent crude jumped more than 60% in March, reviving comparisons with the energy crises of the 1970s.
External estimates suggested oil supply losses of around 8–11 million barrels per day so far, already among the largest disruptions on record, with strategic stock releases struggling to keep prices in check.
Speaking on the “In Good Company” podcast with Norges Bank Investment Management CEO Nicolai Tangen, Birol said the coming month would be worse for supply than March.
“The next month, April, will be much worse than March,” he said. He noted that March flows still included “some cargo ships carrying oil and gas that transited through the Strait of Hormuz before the war broke out.”
“In April, there is nothing,” Birol said. “The loss of oil in April will be twice the loss of oil in March. On top of that you have LNG and others. It will come through to inflation, I think it will cut economic growth in many countries, especially emerging economies. In many countries the rationing of energy may be coming soon.”
The Organisation for Economic Cooperation and Development (OECD) projected US inflation at 4.2% in 2026. This is far above the Federal Reserve’s 2.7% estimate and its 2% target. The gap pointed to a higher-for-longer risk that could weigh on mortgage demand and refinancing volumes well into 2027.
Energy crunch and the rate path
Birol said the IEA is assessing markets “on a daily, if not hourly, basis” and could recommend another release of strategic reserves after member countries pledged a record 400 million barrels in March.
Even so, he stressed that “this is only helping to reduce the pain, it will not be a cure,” arguing the real solution lies in reopening Hormuz, not just leaning on emergency stocks.
For mortgage professionals, the central question has been how far the oil shock would feed back into inflation, bond yields and, ultimately, fixed-rate pricing.
In a recent interview with Mortgage Professional America, Sam Williamson of First American said “the bigger issue is not the initial oil spike, but whether higher energy prices become embedded in the broader inflation outlook,” adding that mortgage rates tend to follow the 10‑year Treasury, which reflects longer‑run expectations more than “day‑to‑day headlines.”
Stickier inflation – whether driven by tariffs or energy – could limit how quickly the Federal Reserve cut rates. One mortgage executive told MPA that if data failed to show inflation under control or “if international tensions escalate, the Fed may feel the need to maintain or even raise rates.”
Markets brace for a potential Fed hike!
— Mortgage Professional America Magazine (@MPAMagazineUS) March 31, 2026
Read the latest insights on how energy shocks and inflation risks could reshape monetary policy and housing finance.https://t.co/JC7PcYe8KY#finance #FederalReserve #inflation #markets
Borrowers face longer road to relief
Birol warned that fuel shortages, initially most visible in Asia, could spread to Europe by April or May, with jet fuel and diesel highlighted as pinch points. That kind of supply‑driven price shock risks squeezing real incomes while keeping central banks wary of cutting too quickly.
For an industry that have spent months waiting for a durable turn in rates, the message is clear: energy markets now sit alongside economic data and Fed statements as core inputs to mortgage strategy.
Until oil flows normalize and inflation expectations settle, lenders and brokers are likely to keep planning for a higher‑for‑longer world and coaching borrowers to do the same.
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