An Energy Shock That Won't Fade

Eight months into the war between the United States and Iran, the Strait of Hormuz remains the variable that dictates everything else. October recorded more than 30 maritime incidents in the zone, against 14 in September. A barrel of Brent holds near ?, a level that joint mediation by Qatar and Pakistan is helping, for now, to contain.

Transport costs tell the story of the tension. Freight rates for very large crude carriers have risen more than 1,600% this year. The TD3C benchmark, which measures the Gulf-China route, climbed from about 400 points in late July to nearly 1,320 in October. Ships transiting Hormuz now earn more than ?.4 million per day. A Saudi Arabia-China voyage still costs about ? per barrel, and regional demurrage reaches ? million per day.

From the Pump to the Price Index

This surge in transport and crude costs feeds through to consumer prices. In the United States, the September price index accelerated more than expected, driven by energy. Diesel stands at ?.30 a gallon. For the sixth consecutive month, inflation outpaces wage growth: real purchasing power is therefore contracting steadily.

The labor market offers no offset. The US economy created only 29,000 jobs in September, against 90,000 expected by economists. Households are losing both purchasing power and visibility on their incomes. Opinion surveys confirm it. The share of Republicans who say the president's economic policy has worsened the situation rose from 18% in January to 35% in October. The share of those anticipating deterioration over one year rose from 14% to 25%. Among an electorate usually lenient toward the executive, this shift signals a malaise that cuts across partisan lines.

France: Confidence at a Low, Indexation Under Scrutiny

In France, the statistical agency reports that household confidence in October is at its lowest since 2013. The composite indicator shed 5 points. The balance of opinion on future financial situation fell 9 points and that on the recent situation dropped 6 points. Eric Heyer, director of the analysis and forecasting department at OFCE, draws the consequence: without confidence, households will save more than usual and consume less. He cites among the levers a reopening of Hormuz to push oil lower, or the adoption of a budget for 2027.

The French case also illustrates indexation mechanisms. The minimum wage was raised 1.18% on January 1, 2026, then 2.41% on June 1, because inflation had crossed the legal 2% threshold since the previous increase. Since June 1, cumulative inflation is only 0.94%. It therefore remains below the threshold, but the government is considering bringing forward the increase planned for January. The gap with the US situation is notable: inflation there is stronger, while French wages are partly protected by the indexation rule.

Markets Holding, for Now

Against this backdrop, financial markets show relative calm. Milan's FTSE MIB stands at 49,628 points, up 0.90%. The spread between Italian BTPs and German 10-year Bunds comes in at 114.67, and the euro gives up 0.41% against the dollar, at 1.113. Nothing in these figures points to a crisis of confidence. Long-term credit also remains open to solid borrowers. Yinson Production raised ?.458 billion over 13.3 years, at 98.164% of par and with a fixed coupon of 6.517%. Agencies assigned expected ratings of BBB+ and Baa2. Investors therefore accept a yield above 6.5% for cash flows deemed highly visible.

This issue serves as a thermometer. It shows that long-term capital exists, but at a price that reflects the current rate and risk environment. The file, however, contains no policy rate or sovereign yield level. The share of tightening that would come from central banks cannot be measured here. One analyst believes the Federal Reserve should raise rates but probably won't. The information is too thin to support a conclusion, but it highlights the dilemma: fighting energy-driven inflation while employment weakens.

What Could Flip the Scenario

Several factors temper the reading of an inevitable vicious circle. Brent is currently capped by mediation efforts. OPEC+ is expected to keep its December production targets after completing the 1.65 million barrel-per-day increase. French inflation remains moderate. And equities have not yet punished the deterioration in confidence.

But the risks are asymmetric. Oil markets anticipate a possible escalation after the US elections on November 3. Attacks no longer target only ships trying to slip quietly through Hormuz: a tanker was hit in Iraq's exclusive economic zone. The conflict between Saudi Arabia and the Houthis adds another front, with a claimed strike on the Ras Tanura refinery, which has a capacity of 550,000 barrels per day. Each event of this kind feeds quickly into freight, crude and, with a lag, consumer prices.

A Divergence to Watch

What the file shows is less a financial crisis than a widening gap between the real economy and the markets. On one side, households whose purchasing power is contracting and whose confidence is eroding, in France as in the United States. On the other, stable stock indices and credit accessible to quality issuers. That gap can last as long as Brent stays contained and markets bet on de-escalation. It would close abruptly in the event of a new energy spike, which would reinforce both inflation and consumer caution. The available figures do not allow dating that tipping point, but they identify its main trigger: Hormuz.

This article was written with the assistance of artificial intelligence and verified by our editorial team.